By Joseph Menn and Varun Aggarwal
March 7 Network security company FireEye Inc
and its investors sold a second round of shares to the
public on Friday to finance expansion and cash in on enthusiasm
for its offerings.
FireEye priced the follow-on public offering of 14 million
shares at $82 per share, raising about $460 million. Only 5.6
million shares were sold by FireEye, with the rest offered by
the company founder and other investors.
The proceeds for FireEye dwarf the amount raised in the
initial public offering in September, but the price set late
Thursday was less than recent trades in the stock, and FireEye
dropped about 9 percent.
Helped by the recent acquisition of high-profile security
forensics company Mandiant, FireEye shares are still four times
the IPO price.
FireEye Chief Executive Dave DeWalt told Reuters that the
secondary price was set low to attract longer term value
investors. He said some of the proceeds would replenish the more
than $100 million cash component of the Mandiant purchase.
Much of the rest will go toward increasing the presence of
the combined company overseas, where sales have risen to 30
percent of the total.
"You will probably see us almost double the countries we're
in from 40 to 80 by the end of this year," DeWalt said. "We're
going to be very aggressive."
DeWalt and Chief Operating Officer Kevin Mandia, who founded
Mandiant and oversaw its investigations of sophisticated
state-sponsored Internet espionage, said FireEye had great
opportunity in countries under pressure from more powerful
nations in Asia, Eastern Europe and the Middle East.
"We want to be in those hot zones," Mandia said. "We're
seeing a shift to more ideological conflict."
DeWalt said FireEye does business in both Russia and
Ukraine, two countries with well-developed hacking communities,
and that it is seeing some sophisticated attacks on the
telecommunications infrastructure in Ukraine.
He said new and even more impressive penetration will likely
occur if the overall conflict escalates, including attempts to
surveil the population to determine individual allegiances.
FBR Capital Markets raised its price target for FireEye
stock to $105 from $90 on Wednesday, citing increased confidence
in the business from recent data points and the removal of the
"secondary offering overhang."
FireEye, which has reported losses since going public, had a
wider adjusted loss of $40.5 million, or 35 cents per share, for
the fourth quarter ended Dec. 31.
The company last month launched intrusion prevention
systems, putting itself in direct competition with Cisco Systems
Inc and Palo Alto Networks Inc. The product
helps companies detect cyber threats that breach their
Morgan Stanley & Co LLC, Barclays Capital Inc, JPMorgan
Securities LLC, and Goldman, Sachs & Co were the lead
bookrunners for the secondary offering.
FireEye shares were down $8.23 to $81.32 in late afternoon