Pilot's Crash Landing



Pilot Network Services Inc., one of the earliest, if not the first company to offer subscription-based security services, has all but closed its doors. The company issued a press release Thursday stating that it laid off most of its employees on Wednesday, and suspended normal business operations.

According to the release, Pilot is retaining a skeleton crew to assist clients with their transitions, but the company had not returned several phone calls for comment at deadline. According to the company's Web site, customers included Newsweek, PeopleSoft, Rand Corp., Sovereign bank, and Venture Law Group.

Nasdaq halted trading of the company's stock on Thursday. Its last share price was 21 cents, down from a 52-week high of $34.87. Trouble for the company started earlier this month when directors Marvin Zonis and Tom Kelly resigned from the board, and the company cut its workforce by 23%.

Gartner security analyst John Pescatore says Pilot's failure isn't a reflection on the managed-security market. It's more a result of management mistakes. "They tried to be a little bit of everything. They were part hosting, part ISP, part security," says Pescatore. "And as a result they didn't have a partner channel like companies that offer managed security [and] partner with hosting companies and ISPs."

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