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Posted On: 08/04/2016 4:35:39 PM
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FireEye plans layoffs as new CEO takes the helm, stock plunges
BY MarketWatch
— 4:12 PM ET 08/04/2016
Kevin Mandia plots restructuring to 'balance growth with profitability'
In his first major move since taking over the top spot for FireEye Inc. Chief Executive Kevin Mandia plans to cut hundreds of jobs and chop spending in several areas in order to find profit at a security firm where growth is slowing down.
In his first media interview since taking over the CEO role from David DeWalt in June (www.marketwatch.com/ story/david-dewalt-out-as-fireeye-ceo-kevin-mandia-to-take-over-2016-05-05), Mandia detailed restructuring plans Thursday that seek to cut about $80 million in annual expenses. Specifically, FireEye hopes that $20 million in cuts in the fourth quarter will help the security-software firm achieve its stated goal of recording adjusted profit in that period.
"We always knew somewhere around 2016, we'd have to change this company as we got scale, and we want to maintain the timeline for achieving non-GAAP profitability," he said from the company's Milpitas, Calif., headquarters in a telephone interview. "I want to balance growth with profitability, and we're serious about that path to profitability."
Chief Financial Officer Michael Berry said FireEye did not yet know exactly how many workers would lose their jobs, but that the company hopes to chop about 9% of its controllable costs, and cuts in the workforce are likely to mirror that percentage, which would mean about 300 to 400 positions eliminated.
"We'll do our best to go after infrastructure costs, discretionary spending and things like that, but unfortunately we will have to reduce employees as well," Berry said.
The cuts were announced along with earnings that disappointed relative to expectations and included a decline in FireEye's annual forecast for the second consecutive quarter. The company reported a loss of $139.3 million, or 86 cents a share, on revenue of $175 million; after adjustments for stock-based compensation, restructuring charges and other costs, FireEye reported a loss of 33 cents a share. The company's billings--an important metric for companies focused on cloud software, which reflects future revenue under contract--came in at $196.4 million.
While FireEye's ( FEYE ) losses were less than expected, revenue and billings came in lower than forecasts. Analysts on average expected FireEye to report quarterly adjusted losses of 39 cents a share on sales of $181.6 million, with billings of $ 209.6 million, according to FactSet.
After bringing down its annual revenue forecast to a range of $780 million to $810 million from a previously stated range of $815 million to $845 million last quarter, FireEye brought down its 2016 target farther Thursday, to a range of $716 million to $728 million. Analysts on average are modeling 2016 revenue of $793.5 million, according to FactSet.
FireEye shares fell as much as 14% in immediate late trading after the report was released. The company's shares, which once topped $80, have fallen 19.2% so far this year to Thursday's close of $16.75, while the S&P 500 index has gained 5.9% in the same time period.
While revenue growth is slowing, Mandia believes that FireEye will return to stronger growth, even with the cuts. He voiced strong support for FireEye'ssecurity initiatives, the side of the business with which he is most familiar. Before serving as COO of FireEye, he started his own security business called Mandiant that first exposed Chinese involvement in hacks of U.S. government servers. That company was acquired by FireEye.
Despite financial issues, Mandia said he feels confident.
"I see the opportunity we have, I see the people we have, feel responsible for many of the people being here. I'm committed to them being successful," he said.
-Jeremy C. Owens; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
08-04-16 1612ET
Copyright (c) 2016 Dow Jones & Company, Inc.
FireEye plans layoffs as new CEO takes the helm, stock plunges
BY MarketWatch
— 4:12 PM ET 08/04/2016
Kevin Mandia plots restructuring to 'balance growth with profitability'
In his first major move since taking over the top spot for FireEye Inc. Chief Executive Kevin Mandia plans to cut hundreds of jobs and chop spending in several areas in order to find profit at a security firm where growth is slowing down.
In his first media interview since taking over the CEO role from David DeWalt in June (www.marketwatch.com/ story/david-dewalt-out-as-fireeye-ceo-kevin-mandia-to-take-over-2016-05-05), Mandia detailed restructuring plans Thursday that seek to cut about $80 million in annual expenses. Specifically, FireEye hopes that $20 million in cuts in the fourth quarter will help the security-software firm achieve its stated goal of recording adjusted profit in that period.
"We always knew somewhere around 2016, we'd have to change this company as we got scale, and we want to maintain the timeline for achieving non-GAAP profitability," he said from the company's Milpitas, Calif., headquarters in a telephone interview. "I want to balance growth with profitability, and we're serious about that path to profitability."
Chief Financial Officer Michael Berry said FireEye did not yet know exactly how many workers would lose their jobs, but that the company hopes to chop about 9% of its controllable costs, and cuts in the workforce are likely to mirror that percentage, which would mean about 300 to 400 positions eliminated.
"We'll do our best to go after infrastructure costs, discretionary spending and things like that, but unfortunately we will have to reduce employees as well," Berry said.
The cuts were announced along with earnings that disappointed relative to expectations and included a decline in FireEye's annual forecast for the second consecutive quarter. The company reported a loss of $139.3 million, or 86 cents a share, on revenue of $175 million; after adjustments for stock-based compensation, restructuring charges and other costs, FireEye reported a loss of 33 cents a share. The company's billings--an important metric for companies focused on cloud software, which reflects future revenue under contract--came in at $196.4 million.
While FireEye's ( FEYE ) losses were less than expected, revenue and billings came in lower than forecasts. Analysts on average expected FireEye to report quarterly adjusted losses of 39 cents a share on sales of $181.6 million, with billings of $ 209.6 million, according to FactSet.
After bringing down its annual revenue forecast to a range of $780 million to $810 million from a previously stated range of $815 million to $845 million last quarter, FireEye brought down its 2016 target farther Thursday, to a range of $716 million to $728 million. Analysts on average are modeling 2016 revenue of $793.5 million, according to FactSet.
FireEye shares fell as much as 14% in immediate late trading after the report was released. The company's shares, which once topped $80, have fallen 19.2% so far this year to Thursday's close of $16.75, while the S&P 500 index has gained 5.9% in the same time period.
While revenue growth is slowing, Mandia believes that FireEye will return to stronger growth, even with the cuts. He voiced strong support for FireEye'ssecurity initiatives, the side of the business with which he is most familiar. Before serving as COO of FireEye, he started his own security business called Mandiant that first exposed Chinese involvement in hacks of U.S. government servers. That company was acquired by FireEye.
Despite financial issues, Mandia said he feels confident.
"I see the opportunity we have, I see the people we have, feel responsible for many of the people being here. I'm committed to them being successful," he said.
-Jeremy C. Owens; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
08-04-16 1612ET
Copyright (c) 2016 Dow Jones & Company, Inc.
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