FireEye Inc (NASDAQ:FEYE) is getting killed again, with FEYE stock starting Friday morning down as much as 15%. That brings the cybersecurity stock’s 12-month loss to roughly 70%, and shares are down about 85% from its early 2014 highs.
Of course, FireEye shares are getting punished after earnings, as the company reported another loss.
The per-share loss of 33 cents was slightly less than Wall Street anticipated, but $175 million in revenue was a disappointment.
But perhaps as interesting to investors was Chief Executive Kevin Mandia revealing plans to lay off hundreds of workers and gut spending, according to a detailed MarketWatch report.
In the interview, Mandia “detailed restructuring plans Thursday that seek to cut about $80 million in annual expenses. Specifically, FireEye hopes that $20 million in cuts in the fourth quarter will help the security-software firm achieve its stated goal of recording adjusted profit in that period.”
It’s undeniable that revenue is growing at FireEye Inc: Revenue was up over 45% in 2015, will rise about 27% this year and another 24% next year. Profitability remains elusive, however, and growth just for growth’s sake isn’t cutting it anymore for FEYE stock holders.
FEYE Stock Is Doomed, But Cybersecurity Is Fine
Some investors would see this is an abject lesson in the challenges of cybersecurity stocks right now, where secular trends are lifting the market but fierce competition on price and aggressive growth plans at companies are burning through whatever cash these companies rake in.
Unfortunately, that’s not the case.
CyberArk Software Ltd (NASDAQ:CYBR) is a $2 billion upstart, but one that has found a way to profitability — and CYBR stock has tacked on 25% year-to-date thanks to improvements in the business.
And Palo Alto Networks Inc (NYSE:PANW) has seen pressures, with PANW stock is down over 30% in the past year, but the company is soundly profitable with a billion in cash on the books. So it’s hard to imagine it’s facing the same acute pain that FEYE stock is.
No, the real problem isn’t that the sector has been overbought and is doomed for declines. A closer look at the space shows that there are a number of companies doing good things and succeeding — but FireEye just isn’t one of them.
Of course, FEYE stock has a chance of turning things around. The current CEO actually just took over in June and is doing his best to right a troubled organization.
But in this fast-moving space, time is not on the side of FireEye Inc or its shareholders.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the aforementioned securities.
