Based on preliminary results, total revenue for 2009 is now expected to be about $284 million and earnings are expected to be in the range of about break-even to a small loss from operations. Cash and short-term investments as of December 31, 2009 are expected to be above $110 million. Cray retired all remaining convertible notes during the fourth quarter of 2009.
During the fourth quarter, a contract modification was not finalized and consequently a milestone was delayed in the agreement covering Phase III of the Defense Advanced Research Projects Agency's ("DARPA") High Productivity Computing Systems programme. This contract delay will have an approximately $7 million negative impact to net research and development expenses in the fourth quarter of 2009. Substantive talks regarding this contract are ongoing and the company expects to complete a contract modification and milestone in the first quarter of 2010.
As with the previous contract, the balance of the modified contract is expected to be received through achievement of a series of pre-defined milestones culminating in the delivery of a prototype system in 2012. Consistent with this change, certain deliverables will be eliminated from the contract, reducing the overall scope and cost of the project. After the anticipated contract modification, the remaining amount of the contract is expected to be reduced by $60 million, to $92.5 million. As a result of the reduction in overall scope, the company expects future research and development expenses related to this programme, net of reimbursement, to be lower than previously anticipated.
While a wide range of results remains possible, Cray expects revenue growth and profitability for 2010. Based on current opportunities and previously announced 2010 contracts, the company believes it could have a strong year. Many variables may impact this outlook, but one significant item is the timing of the availability and release of the next generation supercomputer, code named "Baker", including the completion of development and testing of the Baker interconnect chipset, known as "Gemini", and associated system software. Cray currently expects Baker development to be completed in the third quarter 2010. As a result, the company expects a significant majority of 2010 revenue to be recognized in the fourth quarter.