FireEye Layoffs 'Never Ideal,' But 'Necessary'

FireEye is laying off workers as part of a restructuring process planned long before the COVID-19 pandemic.

The cybersecurity vendor is cutting 6% of its workforce, or 204 employees. Most of the FireEye layoffs affect employees working in mature appliance-based product areas.

More than 40 employees are losing their jobs at FireEye’s global headquarters in Milpitas, California. FireEye’s workforce was 3,400 at the end of 2019.

Kevin Mandia is FireEye’s CEO and board director. He announced his company is laying off workers during Wednesday’s first-quarter 2020 earnings call. Revenues were $225 million for the quarter, a 7% year-over-year increase.

FireEye’s Kevin Mandia

“While there is never an ideal time for this type of action, I believe it was necessary for us to take the steps now to continue to transform our business to a comprehensive security-as-a-service company,” he said.

FireEye will spend more in parts of the business that are growing and ti improve operating performance, Mandia said. FireEye will save $25 million in costs through the layoffs.

“I believe we are in the midst of a shift in the way organizations evaluate, buy and implement cybersecurity solutions,” he said. “And the COVID-19 pandemic is likely to accelerate the shift. Organizations increasingly focus on security outcomes rather than technology alone, and they are demanding proof-of-security effectiveness. This change is happening in parallel with the migration of workloads to the cloud.”

Mandia said FireEye is taking important steps to adjust to that shift. One is using its differentiators to its advantage. The company also plans to “define and own the security validation market” and focus on as-a-service technology.

FireEye Layoffs Not a Surprise

Ovum’s Eric Parizo

Eric Parizo, senior analyst at Omdia, doesn’t expect the FireEye layoffs to distract the company much. And a minor workforce adjustment is not a surprise.

“Like many established cybersecurity vendors, FireEye has been undergoing a lengthy transformation from a largely appliance-based revenue model to a cloud-based SaaS model,” he said. “The pioneer of on-premises malware sandboxing, FireEye has seen that business and its other appliance-based product lines slowly erode over the years as competitors, such as Palo Alto Networks and Cisco, now offer competing solutions delivered from the cloud that are also tightly integrated with other products in their respective solution sets.”

FireEye now is focusing more on intelligence-driven security to “own” the enterprise security operations center (SOC), Parizo said.

“At the center of its platform is Helix,” he said. “Once essentially a legacy security information and event management (SIEM), Helix is being transformed into a multifaceted cloud-based hub for cybersecurity and risk management. The vendor has been acquiring technologies to advance these efforts, most recently with last year’s acquisition of instrumentation vendor Verodin, and earlier this year with the announced deal to buy cloud security posture management (CSPM) startup Cloudvisory.”

FireEye needs to adjust staff in areas where revenue is declining, Parizo said. Much of its staffing and corporate culture has focused on sustaining its appliance business. This move should change that, he said.

“While the timing is certainly unfortunate due to the overall dour economic and employment outlooks as a result of COVID-19, for FireEye the ramifications are negligible in the short term, and should be a long-term net positive,” he said.

FireEye acquired Cloudvisory in January.. The move adds cloud workload security capabilities to its Helix cloud hub.