Newly public Sourcefire sees big stock drop

Newly public Sourcefire sees big stock drop

Sourcefire share price falls 30 percent but CEO not concerned

Security start-up Sourcefire on Monday saw a 30 percent drop in its stock price following a statement issued Friday by the company warning of a first-quarter loss.

The company, which makes network intrusion-prevention products based on the open source Snort program, said it expects its loss for the first three months of 2007 to reach between US$2.2 million and US$2.6 million, with revenue between US$10.1 million and US$10.5 million. The company will officially report its earnings in early May, company officials said.

The stock market was closed Friday, but trading of Sourcefire's shares dropped significantly Monday, when the stock opened at just below $18 and closed just above US$12. Tuesday morning at 11 EDT the stock was trading at US$11.95.

Sourcefire issued shares to the public just a month earlier, on March 8, with shares priced at $15 each to raise $71.8 million. With an impressive customer list and big-name venture capitalists behind it, including New Enterprise Associates, combined with the current popularity of security products, the company was viewed as a start-up with great potential as a public company.

But first-quarter figures aren't supporting that belief.

"Historically, the first calendar quarter has been the slowest quarter of the year for us due to seasonal factors. This year, we saw an exaggeration of that trend due to a smaller than expected initial order from a substantial and strategic new account and an unusual number of transactions delayed or deferred very late in the quarter," said Wayne Jackson, chairman and CEO of Sourcefire, in a prepared statement. "This was particularly dramatic in the Federal sector where we saw a number of delays in the processing of awarded procurement transactions."

The company, founded by Snort creator Martin Roesch, who is now the company's CTO, counts numerous enterprises as customers, as well as the US Department of Defense.

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