CALIFORNIA: FireEye Inc cut its full-year revenue forecast as a clamp down by United States and China on cyber spying led to lower demand for the company’s security products.
Shares of FireEye, which also reported lower-than-expected third-quarter revenue on Wednesday, plunged 15 percent in extended trading, indicating that they may open at an all-time low on Thursday.
President Barack Obama said in September that he had reached a “common understanding” with Chinese counterpart Xi Jinping that neither government would knowingly support cyber theft of corporate secrets or business information.
“The peace treaties are working a bit, particularly in the U.S.,” Chief Executive Dave DeWalt told Reuters.
“Hence the emergency spending doesn’t happen as much. The contract length extension doesn’t happen that much,” DeWalt said.
FireEye offers cloud-based technology to help businesses and government departments fight viruses that try to breach older antivirus software.
FireEye’s billings, a key indicator of its health, was $210.6 million, below its forecast of $225-$230 million in July.
The company cut its full-year revenue forecast to $620 million-$628 million from $630 million-$645 million. The cut in outlook comes after the company had raised it for the second time in July.
Analysts were expecting revenue of $640.77 million, according to Thomson Reuters I/B/E/S.
Revenue rose 45 percent to $165.6 million in the third-quarter ended Sept. 30, but fell short of analysts’ estimates of $167.1 million.
While demand for latest security offerings such as advanced threat protection has risen, analysts have said FireEye has been hurt as competition intensifies.
Rivals Palo Alto Networks Inc (PANW.N), Proofpoint Inc (PFPT.O) and Imperva Inc (IMPV.N) have posted strong results, underscoring the strength in cyber security spending, FBR Capital Markets analyst Daniel Ives said.
“It appears FireEye is struggling to find its sea legs,” Ives added.
Some analysts have also said that a string of executive departures this year could hurt the company’s product development and sales growth.
Michael Sheridan, who had been the company’s chief financial officer since 2011, and Chief Technology Officer Dave Merkel stepped down earlier this year.
Net loss attributable to shareholders widened to $135.5 million, or 88 cents per share, from $120 million, or 83 cents per share, from a year earlier.
Excluding items, the company lost 37 cents per share. Analysts on average had expected a loss of 45 cents per share.
Up to Wednesday’s close, FireEye’s stock had nearly halved since hitting a high of $55.33 in June.
