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Sources: Hexadite Lays Off US-Based Staff After Microsoft Acquisition Announced

Hexadite Thursday laid off a number of employees, including its channel chief, the same day Microsoft said it plans to acquire the security startup.

Hexadite has cut most of its U.S.-based staff, including its channel chief, in the wake of its acquisition by Microsoft, multiple sources close to the company told CRN.

The cuts included most of its U.S.-based team, including its sales, marketing, and operations staff, with two weeks' severance, according to multiple sources close to the Boston-based security startup that was founded in Israel.

The cuts include Vice President of Sales Aaron Cote and Vice President of Channels and Alliances Jessica Couto, a well-known former Carbonite channel executive who joined the company two months ago, sources said. CRN reached out to both executives directly for comment, but has not heard back.

[Related: Partners: Microsoft Acquisition of Hexadite Is Step In Right Direction For Security Push]

The layoffs came Thursday, the same day Microsoft announced that it had signed an agreement to acquire the security automation startup. Terms of the deal were not disclosed.

The cuts do not appear to extend to Hexadite's R&D arm, based in Tel Aviv, Israel. Hexadite has around 35 employees total, with about half of those affected by the cuts, one source said.

"It's disappointing to say the least and, frankly, it's wrong," one employee affected by the cuts said. "This is very disappointing. This is incredibly disappointing." The employee, who did not want to be named, worried that cuts, like this one, would discourage partners and employees from wanting to work with security startups.

Several Hexadite partners also said they were disappointed by the news of the acquisition by Microsoft and the subsequent cuts. One solution provider executive, who did not want to be named, expects to put work "on hold" with the vendor for now, in wake of the acquisition news and layoffs.

"I just don't understand it at all," the partner said.

Hexadite did not respond to a CRN request for comment. A Microsoft spokesperson said, "We are working with the Hexadite team to determine the best options. As company policy, we do not disclose personnel matters. We expect many of the Hexadite team to join Microsoft as part of the Windows and Devices Group."

Hexadite offers a security orchestration and automation platform that uses artificial intelligence to investigate and respond to alerts. The company is backed by Hewlett Packard Enterprise, as well as venture capital firms TenEleven and YL Ventures. It most recently raised $8 million in Series A funding in February, 2016.

Microsoft said it plans to leverage Hexadite's technology to build on its Windows Defender Advanced Threat Protection solution with automatic investigation and remediation capabilities.

"Our vision is to deliver a new generation of security capabilities that helps our customers protect, detect and respond to the constantly evolving and ever-changing cyberthreat landscape," Terry Myerson, executive vice president, Windows and Devices Group, Microsoft, said in the statement. "Hexadite's technology and talent will augment our existing capabilities and enable our ability to add new tools and services to Microsoft’s robust enterprise security offerings."

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