FireEye to slash up to 400 jobs after disappointing results

FireEye will lay off as many as 400 of its 3400 staff after posting quarterly sales below its own forecast, blaming a reduction in state-sponsored espionage attacks from China for the results.

Chief financial officer Michael Berry said the job cuts were part of a restructuring effort that would reduce annual costs by about US$80 million (A$104.5 million).

The job losses were announced after the company reported second-quarter revenue of US$175 million, missing its own projection of US$178 million to US$185 million.

The security software vendor also cut its full-year revenue forecast to between US$716 million and US$728 million, from between US$780 million and US$810 million.

The company is still targeting non-GAAP profitability by the end of 2017 and expects to generate positive free-cash flow in 2017, Berry said.

Executives blamed much of the trouble on a slowdown in FireEye’s services business, including at its high-profile Mandiant forensics unit, which saw revenue grow by just 2 percent in the second quarter compared to a 40 percent increase in the previous quarter.

While its total number of engagements rose, the average revenue from each fell dramatically because the work performed was less extensive.

Chief executive Kevin Mandia said the company was now responding more frequently to financially-driven cyber criminals, who engage in crimes such as ransomware that are relatively simple to clean up.

Mandia said there had been a shift away from large numbers of state-sponsored espionage hackers from China attacking customers in the United States.

FireEye and other cyber security firms said in June that the number of cyber espionage attacks from China appeared to have dropped this year following a Chinese government pledge to stop supporting the digital theft of US trade secrets.