Today: FireEye follows $1 billion Mandiant acquisition with the purchase of a private firm that records all network traffic to track where the bad guys go and what they do.
The Lead: FireEye acquires nPulse to track hackers' movements
FireEye added another soldier to its mission of helming the most complete network-security offering Tuesday, acquiring nPulse Technologies for about $70 million to act as its "black box" to record attacks from nefarious hackers.
The 6-year-old Virginia company brings technology that records and searches network traffic, allowing security teams to find and detail the actions of bad guys who breach their networks, giving companies more information about exactly what was taken or affected in an attack.
"With nPulse, when the details matter, you will have those details. It's not something we want to use every day, but when we need to, we've got that flight recorder to interrogate to get the answers," FireEye Chief Operating Officer Kevin Mandia said Tuesday.
Mandia also came to FireEye in an acquisition, the Milpitas company's $1 billion purchase of Mandiant, which is known for its ability to track and detail hackers who have managed to breach network security. FireEye will now meld nPulse with Mandiant and its own advanced breach-detection technology to offer what it hopes will be the most complete end-to-end network-security offering on the market.
Tuesday's acquisition continues a busy year for FireEye, which went public in September 2013 at a valuation of more than $2 billion, and immediately soared higher on a trajectory that only steepened after the January acquisition of Mandiant.
"It's been a successful run over the last few years -- Mandiant, I view as a game changer. Now its about rounding out the overall product strategy and filling in the holes to make sure that FireEye can be the end-to-end security vendor," FBR Capital Markets analyst Daniel Ives said Tuesday.
With enthusiasm running high, FireEye exercised a giant secondary offering for $82 a share in early March, just ahead of a downfall for high-flying tech stocks that has resulted in FireEye shares diving to less than half that price. While FireEye's market cap has been chopped in half in the past two months, it is still more than double the company's IPO valuation, and investors see reasons for bullishness: The company's sales jumped more than 93 percent in 2013, putting it among Silicon Valley's top 150 publicly owned tech companies in terms of revenues, at No. 132, before any accounting of Mandiant's addition to the company.
In its first earnings report with Mandiant factored in, FireEye reported a net loss of $101.2 million, or 76 cents a share, on sales of $74 million Tuesday afternoon, a 160 percent increase in sales from the same quarter a year ago.
Ives called FireEye's performance on Wall Street so far "a roller-coaster ride," but said the company still has more to prove.
"FireEye is in the right place at the right time, they have a great management team and have done smart acquisitions, but now it comes down to execution and proving to investors that they're going to be a clear winner in this battle for cybersecurity dollars," he said.
The technology FireEye receives has shown to be critical for large companies suffering through a data breach. For instance, when the retailer Target suffered an incursion last year that involved the theft of credit-card information and other data from customers, it took days from the discovery of the breach to the disclosure of what information was taken. Even worse, the company had to announce later that even more information than previously thought had been accessed, and a lack of reliable information led to an inability to accurately recount what was taken, a problem that Mandia said usually leads companies to disclose a higher number than nPulse would show.
"Since we have a record of all the traffic on the network, we have the ability to give you those answers very quickly, so we tie a lot of pieces together," nPulse CEO Tim Armstrong said Tuesday.
The nPulse team will remain in their offices in Charlottesville, Va., but is expanding into Northern Virginia, near Mandiant's former headquarters, and all its current workers will become part of FireEye. The deal, which involves about $60 million in cash and $10 million in stock considerations, is expected to close in the second half of this year, the companies said in a statement Tuesday.
FireEye stock dropped 7.7 percent to $37.13 Tuesday, then plummeted to less than $34 after the company released its quarterly earnings report and information about the acquisition.
SV150 market report: Twitter plummets to new lows, Alibaba files for IPO
Wall Street went back to beating up Silicon Valley technology stocks Tuesday, as downturns that had put many Bay Area tech firms' stock in bear market territory returned as Twitter's lockup expired, but Alibaba officially filed for an initial public offering after the market closed and could provide hopes for Yahoo's future.
Twitter plunged to its lowest prices since its Wall Street debut, losing 17.8 percent to $31.85, pushing its market capitalization down to less than half its all-time peak at $18.2 billion. After the first lockup on Twitter shares expired at the end of Monday's trading session, hundreds of early employees and investors received their first chance to sell Twitter shares, and apparently many did: Twitter's volume of 135 million shares trading hands broke the record set on its first day of trading, with volume in the first 20 minutes of trading doubling the company's daily average of about 13.2 million. The problem might have been worse, but Valleywag reported that some former Twitter employees who tried to trade stock were stymied by issues at the San Francisco social-networking company.
Twitter was not alone, as the same companies that had suffered at the hands of investors in the past two months after flying high in 2013 were again sent massively lower. Silicon Valley's other social-media stocks joined Twitter's Tuesday tumble: Facebook dropped 4.4 percent to $58.53 while looking for inroads to the small-business community; LinkedIn declined 5.7 percent to $142.33 while reportedly plotting an expansion in Mountain View and more enterprise controls; and Yelp dove 13.4 percent to its lowest closing price since August, $52.13. Streaming media was also once again weak, with Pandora Media declining 8.9 percent to $22.52 and Netflix falling 5.3 percent to $326.19 while signing an agreement with its largest cable company yet to have its streaming-video service available on a set-top box. Cloud software was also once again weak, with Salesforce, Workday, Wageworks and Netsuite all falling more than 3 percent.
Electronic Arts fell 2.5 percent to $28.05 in regular trading, but soared to more than $32 in after-hours action after releasing its earnings report. Google declined 2.4 percent to $522.57 while acquiring an advertising-technology company called Adometry. Intel made a big effort to show off more powerful Chromebooks, laptops that run on Google's Chrome OS, and was one of the day's few gainers, adding 0.1 percent to close at $26.20. Apple fell back below $600, dropping 1.1 percent to $594.41 while welcoming new retail boss Angela Ahrendts with a stock package worth nearly $70 million. Santa Clara graphic-chips company Nvidia was forced to release its earnings two days early after an email snafu, and the company's shares fell 2 percent to $18.25; Nvidia still plans to hold its conference call on Thursday as previously announced. Tesla Motors dropped 4.3 percent to $207.28 a day ahead of its earnings report, as the Palo Alto electric car maker gave up its attempts to secure the name "Model E" for its third generation car.
After the bell, Chinese e-commerce giant Alibaba officially filed for an IPO with the Securities and Exchange Commission, though the company neglected to include many details, such as a stock ticker, the exchange shares will trade on, number of shares and more. While the filing stated the company will seek $1 billion, it is expected to fetch far more when it does go public, and the numbers in Tuesday's filing shows a huge company outperforming U.S. e-commerce companies financially. Yahoo stands to gain financially when Alibaba does go public, with a 24 percent stake and expectations that the Sunnyvale company will sell half its shares in the offering, though Tuesday's filing does not include information on selling shareholders. Yahoo lost 1.1 percent Tuesday to close at $36.49, but rebounded by about 1 percent in late trading after the filing hit.
Up: LeapFrog, Ubiquiti, Intel, VMware
Down: Twitter, Yelp, Pandora, LinkedIn, SolarCity, Netflix, Facebook, Tesla, Workday, Salesforce, Zynga, Adobe, NetApp, Google, Nvidia, eBay, AMD, Gilead
The SV150 index of Silicon Valley's largest tech companies: Down 24.67, or 1.76 percent, to 1,380.75
The tech-heavy Nasdaq composite index: Down 57.3, or 1.38 percent, to 4,080.76
The blue chip Dow Jones industrial average: Down 129.53, or 0.78 percent, to 16,401.02
And the widely watched Standard & Poor's 500 index: Down 16.94, or 0.9 percent, to 1,867.72
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.