News Column

Biz Break: FireEye CEO David DeWalt says online shoppers face increasing danger

August 5, 2014

By Jeremy C. Owens, San Jose Mercury News

Aug. 05--Today: FireEye's growth continues as CEO David DeWalt says antivirus protection doesn't actually protect consumers. Also: Apple iPhone event reportedly planned for Sept. 9.

The Lead: David DeWalt says enterprise-level security is consumers' best protection

David DeWalt proclaimed Tuesday that antivirus software he helped lead to prominence is no longer protecting consumers from cyberattacks, a change that has helped his current company FireEye grow at a speedy clip.

"Everything the consumer once took for granted while shopping online has become more risky," DeWalt said in an interview with this newspaper Tuesday, explaining that the antivirus model prevalent on many personal computers now detects less than 20 percent of attacks, giving typical Web users "less and less capability to protect themselves."

DeWalt, former CEO of McAfee, said that is why he accepted the CEO position at FireEye, a Milpitas enterprise security company that seeks to detect attempted incursions and snuff them out on a larger scale.

"Large corporations, particularly large retailers and financial-services firms, are getting breached at unprecedented levels, some of which have hit the media but most of which have not," he explained, later adding, "My goal here is to attack directly the antivirus market in all its areas it does business today, because it's just an inferior model."

DeWalt's view of the security situation was bolstered even as he spoke, with the New York Times reporting that Russian hackers had amassed the largest known collection of stolen information from Web users.

FireEye has taken advantage of its early-adopter position to post sales growth that DeWalt says makes it the fastest growing security company in the world, which continued with second-quarter numbers released Tuesday. The company reported a loss of $116.8 million, or 82 cents a share, on sales of $94.5 million, producing year-over-year sales growth of 184 percent. The company brought on a new head of sales, John McGee from Informatica, in hopes of continuing that growth.

The company has been under fire from investors for a rapid series of big moves in 2014, including the $1 billion acquisition of Mandiant in January and a secondary stock offering in March that pulled in $1 billion by selling shares at more than four times the IPO price. When the company announced in-line numbers and yet another acquisition in May, an already declining stock price dropped even faster as investors revolted against the rapidly changing company, chopping off more than half of FireEye's market valuation.

"You could almost write a novel about what happened at FireEye from Jan. 1 to early May," FBR Capital Markets analyst Daniel Ives said Tuesday, "and it would be a novel that some investors would put in the horror section."

Ives said investors will like FireEye's second-quarter results after the maelstrom of news in the first half of the year, but will be waiting to see the results of all that action in the second half.

"It was a solid quarter, a rebound from what we saw last quarter, but investors are going to continue to view this with a glass-half-empty view until DeWalt continues to show that hypergrowth through the second half and into 2015," the analyst predicted.

FireEye raised its revenue forecast for the current quarter as well as the full year, and DeWalt said a variety of new products from the combination of FireEye and Mandiant will launch in the second half, beginning with a major platform debut in September.

"They're using cloud architectures, leveraging global threat intelligence in ways the industry has never seen before," DeWalt said. "These are things that Mandiant and FireEye will do together, and will yield some really interesting new innovation."

He added that distaste for the company's big moves would not change his tactics.

"We're going to be continue to be very aggressive trying to win," he said. "We're going to continue to do acquisitions, we're going to continue to have new products, and we want to continue to grow at the pace that we are."

FireEye shares gained 1.6 percent to $34.75 in Tuesday's session, and were trading at the same price two hours into late trading.

SV150 market report: Stocks fall as Apple preps September iPhone launch

Wall Street suffered Tuesday amid concerns about tensions in the Ukraine, with tech stocks hurting from a decline by Apple as reports suggested it was a month away from a new iPhone debut.

The Wall Street Journal, Bloomberg News and Recode all reported Tuesday that Apple will introduce its latest smartphone at an event on Sept. 9. The Cupertino company will go into that event with momentum on its side, as it reported Tuesday that July was the best month ever for revenues in its App Store, which sells software for its mobile devices. Still, shares in the world's most valuable company declined 0.5 percent Tuesday to $95.12, a rarity amid a stock resurgence that has made its current stock-repurchase program the most profitable on record, according to a Bloomberg report.

Google fell 1.6 percent to $573.14 as reported acquisition target Twitch shut down its original product, live-streaming site Justin.TV. Tesla Motors declined 3 cents to $238.49 while looking for an architect to build its Gigafactory, and Facebook dropped 1.1 percent to $72.69 after a report that immigrant smugglers use the service to complete their tasks. VMware fell 1.4 percent to $98.66 after analysts suggested parent company EMC divest its ownership stake in the Palo Alto software company, echoing an earlier call from an activist investor. eBay gained 0.4 percent to $53.26 despite a report that PayPal's two-factor authorization was hacked, and SunPower declined 2.1 percent to $31.26 while striking a deal with auto manufacturers.

Up: AMD, SolarCity, Symantec, LinkedIn, GoPro, Twitter, Zynga, Juniper, eBay, Adobe, Gilead, Nvidia, Netflix

Down: Intel, Splunk, Yahoo, SunPower, Workday, Pandora, Google, Applied Materials, VMware, Sandisk, Facebook, Salesforce

The SV150 index of Silicon Valley's largest tech companies: Down 11.84, or 0.77 percent, to 1,532.89

The tech-heavy Nasdaq composite index: Down 31.05, or 0.71 percent, to 4,352.83

The blue chip Dow Jones industrial average: Down 139.81, or 0.84 percent, to 16,429.47

And the widely watched Standard & Poor's 500 index: Down 18.78, or 0.97 percent, to 1,920.21

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Sign up for the 60-Second Business Break newsletter at www.siliconvalley.com. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

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(c)2014 San Jose Mercury News (San Jose, Calif.)

Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com

Distributed by MCT Information Services


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Source: San Jose Mercury News (CA)


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