By Alec Klein
Washington Post Staff Writer
March 10, 2007
Security software maker Sourcefire debuted yesterday as a public
company, and its share price nudged up 3.3 percent on the first day of
trading. The market value of the Columbia company reached of $358
million, far exceeding its price when national security concerns
scuttled an Israeli firm's attempt to buy Sourcefire in 2005.
The company sold shares in its initial public offering at $15 each,
above analysts' $12-to-$14 forecast, and raised an estimated $71.8
million. Sourcefire closed at $15.49 a share on the Nasdaq Stock Market.
Sourcefire, which makes software that detects, monitors and blocks
unauthorized access to computer networks, plans to use the money for
working capital and general corporate purposes, according to public
filings. Its software is used by more than half of the 30 largest U.S.
government agencies -- including the FBI, the Department of Defense and
the Department of Homeland Security -- and by government contractors
such as Lockheed Martin, according to company records.
Sourcefire's ties to the intelligence community raised concerns when it
agreed in October 2005 to be acquired for $225 million by Check Point
Software Technologies, an Israeli company. The federal Committee on
Foreign Investment in the United States expressed concerns about
national security. Sourcefire's commercial product -- based on software
called Snort because it "sniffs" data to detect network breaches -- is
founded on an open-source program, meaning that people can download it
for free and see how it was written. In March 2006, the companies
canceled the deal.
With its IPO, Sourcefire is capitalizing on growing demand for computer
security software, but it must compete against bigger companies,
including McAfee. Sourcefire attracted $56.6 million in venture-capital
funding even as other high-tech start-ups sought to be acquired rather
than go public because of the relatively high cost of complying with
The company declined to comment yesterday, other than in a prepared
statement in which chief executive Wayne Jackson said that "everyone at
Sourcefire is excited about passing this important milestone and
entering the next phase of the business as a publicly traded company."
Sourcefire was founded in 2001 by a software engineer. Its revenue rose
36 percent, to $28.9 million, for the nine months ended Sept. 30, 2006,
from $21.2 million in the comparable period in 2005. Sourcefire has yet
to post an annual profit, but its upward trajectory is appealing to
investors, an analyst said. "It seems we're on the cusp of breaking into
uncharted financial territory, which is a big draw for investors," said
David Menlow, president of IPO Financial Network, a research firm in
Staff writer Kim Hart and staff researcher Richard Drezen contributed to
Copyright 2007 The Washington Post Company
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