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FireEye Falls on Stock Offer Pricing

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Internet software company, FireEye, Inc. (FEYE - Free Report) announced that it has filed a registration statement of its public offering of common stock. Following the announcement, the shares fell 8.7%. The number of shares to be sold and the division of shares between the company and the shareholders remain to be decided.

Morgan Stanley & Co. LLC will act as the primary book-running manager for the offering. In conjunction with this offering, shares of the common stock will partly be sold by FireEye and partly by its existing stockholders. The company, however, will not receive any proceeds from the shares sold by the stockholders.

The statement has already been filed with the Securities and Exchange Commission, which is yet to become effective.

Earlier, in Sep 2013, FireEye announced that it has priced its initial public offering of 15,175,000 shares of its common stock at a price of $20.00 per share. Additionally, the underwriters had a 30-day option to purchase up to additional 2,275,000 units to solely cover over-allotments, if any.

The new offering will lead to further share dilution for FireEye.

FireEye uses cloud-based technologies to help businesses protect their networks from computer viruses that evade old-school anti-virus software made by companies such as Symantec Corp. and Intel Corp.'s McAfee security division.

In the last concluded quarter, the company reported strong revenues of $42.7 million, up an astounding 95% year over year. Billings of $70.8 million also soared 103% year over year.

Cyber security companies in particular are in high demand because of the scarcity of public corporations in that market and the growing threat of online crime. Therefore, businesses are looking to FireEye and others to provide technologies to augment anti-virus software.

Currently, FireEye has a Zacks Rank #2 (Buy). Other stocks in the same sector that are looking good are Constant Contact Inc. , E2open, Inc. , and GlassesOff Inc. , all carrying a Zacks Rank #2 (Buy).

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