* Sees 2014 adj loss of $2.10-$2.30/share vs prev forecast
* First-quarter revenue $73.9 mln vs est $71.6 million
* CEO links share price fall to end of IPO insider lockups
* To pay $70 mln for nPulse
(Adds CEO and analyst comments; updates shares)
By Sruthi Ramakrishnan
May 6 Cybersecurity company FireEye Inc
forecast a bigger loss this year as it spends more on developing
new products, sending its shares down as much as 10 percent in
The company uses cloud-based technologies to help businesses
fight off sophisticated computer viruses that evade old-school
anti-virus software made by companies such as Symantec Corp
and Intel Corp's McAfee security division.
Companies and governments are spending more on Internet
security in the face of increasingly complex attacks by
cyber-criminals, such as the data breach at U.S. retailer Target
Corp that resulted in the theft of at least 40 million
payment card numbers.
FireEye also said it would acquire privately held nPulse
Technologies for about $70 million. NPulse handles ultra-fast
search and analysis of network traffic and helps customers
detect and prevent data loss.
"We are spending more money on research and development to
innovate (and) disrupt the market out there, and ...doing a
little bit more in our service area, incident response area and
expanding that," David DeWalt told Reuters.
The company said it will announce four new products in the
next 90 days, and four new services in the next few months.
FireEye expects full-year adjusted loss of $2.10-$2.30 per
share on revenue of $405 million to $415 million. Research and
development costs are expected to be as much as 40-43 percent of
It had previously forecast a loss of $2.00-$2.20 per share
on revenue of $400 million to $410 million, with research and
development expenses as 36-39 percent of revenue.
Analysts on average were expecting a loss of $2.04 per share
on revenue of $406.9 million, according to Thomson Reuters
"Given the company's high growth status, investors wanted to
see a massive beat and raise out of the gates for 2014, instead
the company gave a good, but not great overall performance to
start the year," FBR Capital Markets analyst Daniel Ives said.
"The view on FireEye as well as many high growth stocks has
shifted from a glass half-full to half-empty view as seen by
valuations over the last few months, FireEye has now become a
"prove me" stock in the eyes of many tech investors."
FireEye hit the headlines last month when it warned that a
sophisticated group of hackers had exploited a bug in Microsoft
Corp's Internet Explorer web browser. Microsoft rushed
a fix soon after.
But FireEye stock has lost about 40 percent of its value
since early April after research firm NSS Labs said FireEye's
breach-detection systems underperformed rival offerings by Cisco
Systems, Trend Micro Inc and General Dynamics
The net loss attributable to FireEye's shareholders widened
to $101.2 million, or 76 cents per share, in the first quarter
ended March 31, from $26.9 million, or $1.78 per share, a year
earlier, before the company listed.
Excluding items, the company reported a loss of 53 cents per
Revenue nearly tripled to $73.9 million. Analysts on average
had expected a loss of 53 cents per share on revenue of $71.6
million, according to Thomson Reuters I/B/E/S.
Shares fell as low as $33.38 after the bell on Tuesday
before recovering to $33.50. They had been as high as $97.35 in
DeWalt linked the fall in the shares to the end of share
lock-ups after its IPO last September. Some insiders were able
to sell shares from March 19 and a further 82.2 million shares
will be unlocked for potential sale from May 21.
"This lockup anxiety is related to the number of shares that
will come, you know, off lockup coming up this particular
quarter," DeWalt said on a conference call with analysts, adding
the company's top three executives had no plans to sell shares.
(Additional reporting by Abhirup Roy in Bangalore; Editing by
Saumyadeb Chakrabarty and Rodney Joyce)