Cbeyond Communications files for IPO

Freshly delivered into my mailbox from VentureWire (requires subscription):

"Cbeyond Communications Inc., a provider of voice, data and applications over broadband for small businesses, filed an initial public offering Monday to sell up to $172.5 million in common stock, according to a Form S-1 filed with the Securities and Exchange Commission."

Admittingly, I hear the first time about Cbeyond. Here is what Cbeyond make their money with, according to their website:

"Using Voice over Internet Protocol (VoIP) and a 100% Cisco network, Cbeyond delivers to small business customers (an entrepreneurial class of customer with 4-200 employees - generally using 4-48 phone lines) an integrated package of high quality local and long distance telephony services, high-speed, T-1 Internet access and Internet-based applications for about the same price that small businesses typically pay for local and long distance phone service alone."

So wrapped-up, Cbeyond offers connectivity, a dial-tone and managed services, everything IP-based. This is the beauty of IP - it's end-to-end nature extends scope (as in number of services) and reach (as in reach into the customer's premises) of service offerings, and it enables smaller players like Cbeyond to enter markets formerly exclusively served by the incumbents (or not, that is).  Initial backers included Madison Dearborn Partners, Battery Ventures and VantagePoint Venture Partners. Cbeyond was founded in late '99 and pocketed a total of $136 million in VC.

I believe the IPO and subsequently the stock price of Cbeyond is going to be an interesting thing to follow up on, as they are going after a segment that has gained some attention from the big ones: Targeting large corporations is a no-brainer strategy and the SME market is something both telcos AND equipment vendors like Cisco, Siemens and Alcatel want to go after. The telcos have started some time ago to reorganize their sales force and product delivery to target this market segment, as this is (may I say finally) considered a natural evolution of their business, and I am quite positive that very soon we will see the respective offerings from the equipment vendors well beyond their current beachheads and investor day power point slides. For them, it's an opportunity to move up from their ever-more commoditized hardware business (did anybody say Huawei?) to the higher-margin solution market. It will be interesting to see what happens when e.g. Cisco starts attacking Verizon's customers base when Cisco is one of Verizons suppliers.

Cbeyond's S-1 filing can be found on the SEC website through EDGAR search (direct link that resulted from my search). I didn't have time to go through the filing, but hopefully will be able do so some time this week: the financial statements will be interesting to read, especially for valuation purposes and to see what return Cbeyond will generate for their pre-IPO investors.  

Comments

[David]

Don't do business with cbeyond. They experienced a catastrophic outage yesterday, still have not foxed the problems - meanwhile our firms clients cannot communicate with us. There tech support is clueless and non existent. They are a jumbled mess. Be weary ye potential investor.

[Tim]

David, did cbeyond ever resolve the problem? How long were you down and what did they say caused the outage?

[boulder545]

Cbeyond has chosen to place no emphasis on the Cbeyond management interface (Cbeyond Online). Cbeyond Online is used to manage your account, including email, phone, vm, and all other Cbeyond services.

We have used Cbeyond for 4 years.

Cbeyond online is always sooooo slooooow it is painful to administer your account.
The Cbeyond Online server is often down and always slower than any other service I know of.

I can only believe this is the result of some bad management decision.

The email administration (setting up domains, setting up email accounts, and modifying accounts) is not only slow, but the server kicks you out on most operations. (Example: after updating a mail forward the system kicks you out.)

Bottom line is they have not funded the on-line management interface and this results in a terrible waste of time attempting to manage your account. If you pay the bills, you should assume a large cost here.

If I were the president I’d assume the worst, gut the team and start over. It would cost next to nothing to buy a few high-end web servers to problem solved.

[Charles Lloyd]

This company could not provide any level of consistent phone service for 4 months. We submitted over 20 trouble tickets and out basic phone connectivity was never consistent.

Beware of CBeyond! Granted, they have nice people there, but their technology, or lack thereof, can destroy your business.

You can read more about my story at www.cbeyondservice.blogspot.com

[Nancy Balt]

I have had Cbeyond for several years and that are an incredible managed service provider. Their online account management tools are awesome, I'm not sure about slow times on the site as I have never had a problem. Their customer service is very timely and efficient. I would recommend this service to anyone.