George Kurtz, CEO and co-founder of CrowdStrike speaks at the WSJTECH Live conference in Laguna Beach, California, USA on October 21, 2019.
Mike Blake | Reuters
Crowd Strike Microsoft shares fell about 13% Monday morning as the cybersecurity software company continued to help customers across industries recover from a power outage that knocked out millions of jobs. Microsoft Windows devices were offline last week.
Early Friday, the company released a flawed update to its Falcon security software that crashed computers, servers in data centers and displays, grounding flights and canceling medical appointments. Microsoft said the incident affected 8.5 million Windows devices, less than 1% of the global total.
IT staff rushed to fix the computers. Meanwhile, hackers sought to capitalize on the confusion by creating malicious websites that appeared to offer software updates. CrowdStrike CEO George Kurtz spoke about the situation live on CNBC’s Jim Cramer.
CrowdStrike shares fell 11% on Friday, but the fallout is far from over. Over the weekend, people shared photos on social media of Windows machines displaying the so-called “blue screen of death,” a sign that computers need attention from administrators. CrowdStrike said Sunday it was testing a way to fix affected machines more quickly.
Guggenheim Securities downgraded CrowdStrike Inc.’s shares to neutral from buy on Sunday. Analysts led by John DeVucci said the stock still trades at “the highest multiple of recurring revenue across our full software coverage.”
It may take some time for CrowdStrike to repair its image, and the consequences are likely to negatively impact engagements, the analysts wrote.
“We continue to have the utmost respect for the CrowdStrike leadership team and believe the company will ultimately emerge stronger as a result of this incident, and if investors have a multi-year time horizon, they can look beyond it,” they wrote. “However, we find it difficult to tell investors that they need to buy CRWD now.”
Goldman Sachs maintained its buy rating on CrowdStrike shares in a note early Monday. But analysts at the investment bank said they expect CrowdStrike’s deals to take longer to close between the outage and July 31, when the company’s fiscal second quarter ends.
“Our recent conversations confirm our view that there will likely be little share shifts at the endpoint following this event – although we recognize that additional details in the postmortem will further strengthen this view,” analysts led by Gabriela Borges wrote.
They pointed to the 2010 McAfee outage that took down computers to give some idea of what happened before last week’s events. “The revenue impact from the deferrals was approximately $6 million of unrecognized deferred revenue on the balance sheet, and another $14 million of revenue was negatively impacted,” CEO Dave DeWalt told analysts on a conference call. Intel bought the antivirus company in 2011.
Watch: Cramer's Stop Trading: CrowdStrike
