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FireEye Laying Off 10 Percent Of Workforce As Part Of Major Restructuring

Three months into the CEO role at FireEye, Kevin Mandia told CRN that the cutbacks will impact staffing, discretionary spending and infrastructure across all of the company.

FireEye, one of the top next-generation security software makers, is laying off 10 percent of its workforce - about 400 employees - in a major restructuring after reporting a $139.32 million loss for the second quarter ended June 30.

FireEye CEO Kevin Mandia, who took over as CEO just three months ago, said in an interview with CRN that the cutbacks will impact staffing, discretionary spending and infrastructure across all of the "all different groups."

When asked specifically if the channel organization will be affected, FireEye CFO Mike Berry said: "We will look at all the lines of business to get the right go to market and capacity…We will look at everything."

[Related: Fortinet Lays Off Multiple VPs, 100 Employees In Sales And Marketing]

That said, Berry stressed that having "great products and being able to sell them and get them to our customers" is critical to the company's success going forward.

FireEye shares were down $2.26 or 13 percent to $14.50 in after-hours trading.

The cutbacks came even as FireEye posted better than expected non-GAAP net loss per share of 33 cents on a 19 percent increase in sales to $175 million.

The Wall Street consensus was a non-GAAP net loss of 39 cents per share on sales of $181.7 million.

The cutbacks are part of a plan approved by the FireEye board of directors to "reduce operating expenses and align the company's expense structure" in order to achieve non-GAAP profitability in the fourth quarter next year.

As a result of the restructuring, FireEye said it expects to recognize pre-tax charges of $15-$20 million in the third fiscal quarter related to severance and one-time costs associated with the cutbacks.

The CEO for a top FireEye enterprise partner, who did not want to be identified, said his company's FireEye business has declined in the midst of increasing channel conflict since the $1 billion acquisition of cybersecurity services company Mandiant Corp. at the beginning of 2014.

Mandia, the former Mandiant founder and CEO, took over the FireEye CEO role in June following the departure of Dave DeWalt.

"We are increasingly using Cyphort rather than FireEye because of the channel conflict on the FireEye side of the business," said the executive. "Cyphort is more channel-friendly. FireEye had a great product but they were too arrogant and they never fully embraced the channel."

"They lost their way when they acquired Mandiant," said another executive for the FireEye enterprise partner, who also did not want to be identified. "They became a lot more services-focused and started competing with us more."

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