FireEye's stock fell nearly 18 percent Thursday evening amid a revenue shortfall and management shakeup at the security company. The company's Q4 2016 revenues were down slightly from Q4 2015, and the company's forecast for Q1 2017 is roughly $10 million to $16 million below Wall Street's earlier expectations, Thomson Reuters estimated.
FireEye has spent the past year attempting to jumpstart its security business -- which had been a rising star in recent years until several recent missteps. Chief among them: Acquiring Mandiant for $1 billion in 2014. The deal looked sexy at the time, but FireEye wound up alienating some channel partners as the company pushed deeper into IT consulting.
By November 2016, FireEye channel executives pledged to win back partner trust. A channel boost has yet to materialize. But the company vowed during an earnings call on Thursday to build stronger partnerships.
Amid the revenue weakness, FireEye CFO Mike Berry is leaving the company. Frank Verdecanna will succeed him. Chairman David DeWalt has resigned. DeWalt also stepped down as CEO last year.
FireEye also hired Kevin Taylor to lead the company’s EMEA sales organization. Taylor reports to Bill Robbins, who joined FireEye in November as executive VPof worldwide sales. John Watters, the former CEO of iSIGHT Partners, has been appointed to the newly created role of executive VP of Global Services and Intelligence.
Investing in the Channel
Meanwhile, FireEye continues to seek stronger channel relationships.
"In terms of process, we have rules of engagement to ensure virtually all FireEye sales will go through the channel," said Kevin Mandia during Thursday's earnings call. "We have clearly communicated the exceptions to our partners and will continue to encourage them to take on more of the sales process. At the same time, we will hold ourselves accountable for the compliance with our policies. We are also working across the board to minimize the number of deals that go through our non-standard pricing process, or NSP process, so partners can control their margin and shorten their sales cycle."
On pricing, FireEye has "specifically worked with partners" to ensure a new appliance and Cloud MVX Essentials pricing is aligned with mid-market customer and partner needs. "This has resulted in a highly competitive suite of on-premise, virtual and hybrid network security solutions made available in late Q4," he added.
Continued Challenges
Still, a red flag emerged when FireEye declined to provide annual profit guidance until later this year. The company is rescheduling its annual analyst day (pushing it back, I assume) and will provide financial guidance at that time.
While FireEye continues to struggle, rivals are gaining momentum. Symantec appears revitalized by the recent Blue Coat acquisition; Cisco and its Umbrella business are showing strong momentum; Sophos has midmarket momentum and players like Webroot have caught on with MSPs. Meanwhile, Kaspersky Lab recently unveiled its 2017 channel partner program.
Coverage updated Friday, Feb. 3, 6:40 a.m. ET with comments from FireEye earnings call.
