Back to top

Image: Bigstock

FireEye (FEYE) Concludes Blackstone-Led Capital Investment Deal

Read MoreHide Full Article

Last week, FireEye (FEYE - Free Report) announced that it has closed the capital-investment deal with a group led by Blackstone. The deal was announced on Nov 19, wherein investment firms — Blackstone and ClearSky — had agreed to make a $400-million capital infusion through buying convertible preferred stocks of the cybersecurity solution provider.

Per the terms of the deal, Blackstone and ClearSky have purchased 400,000 shares of a newly-designated 4.5% Series A Convertible Preferred Stock of FireEye, with a purchase price of $1,000 per share. FireEye noted that the conversion rate of the preferred stocks has been revised downward to $17.25 per share from the earlier agreement of $18.

FireEye had previously said that it will use the net proceed from this offering to fund the Respond Software acquisition deal. Notably, on Nov 19, it agreed to buy Respond Software, a cybersecurity investigation automation company, in a cash-stock deal worth $186 million.

Additionally, FireEye intends to use the proceeds from investments to support strategic its growth initiatives, and invest in cloud platform and managed services portfolio.

Remote Working Trend Driving Cybersecurity Demand

Remarkably, cybersecurity solutions and cloud services are gaining traction in order to facilitate the smooth running of business operations amid the remote-working wave due to the COVID-19 pandemic.

Markedly, the company’s professional services revenues climbed 18.5% year over year and its product, subscription and support revenues increased 2.2%, in the recently-concluded quarter.

Moreover, strong adoption of FireEye’s Mandiant Solutions and the recent investment along with a robust product portfolio are anticipated to drive the company’s growth.

Red Team Cyberattack May Dent FireEye’s Image

Last week’s cybersecurity theft at FireEye might affect its business in the days to come. In a Dec 8 blog posted by the company, FireEye CEO Kevin Mandia disclosed that attackers have stolen the “Red Team” tools used by its officials for testing customer security.

The latest data breach has put FireEye’s reputation at risk. This can impact its business in the upcoming period as customers might be apprehensive in buying its solutions which couldn’t safeguard the company from hackers.

SolarWinds (SWI - Free Report) has become the first corporate victim of the data breach at FireEye. On Dec 13, the firm said that its Orion network monitoring products rolled out in March and June have become victim to a highly sophisticated, manual supply-chain attack.

FireEye noted that it is working closely with the Federal Bureau of Investigation and some of its partners, including Microsoft Corporation (MSFT - Free Report) , are conducting an in-depth investigation on the breach.

FireEye currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A better-ranked stock in the broader technology sector is NVIDIA Corporation (NVDA - Free Report) . The stock currently carries a Zacks Rank of 2 (Buy) and has an expected long-term earnings growth rate of 18.3%.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>