Deutsche Bank's 1Q12 Cheat Sheet for Cbeyond

In a research report published this morning, Deutsche Bank expects Cbeyond's CBEY growing pains to impact 1Q12 results. According to Deutsche Bank, "Our revenue est of $123.5M in 1Q12 is flat with 4Q and only up 3.8% vs. 1Q11, with decelerating growth driven by a shift to a “2.0” sales model focused on “tech-dependent” customers. As part of this transition, CBEY will immediately reduce its traditional “1.0” sales force and eventually replace them with “tech savvy” reps. We expect the short-term impact to be 30-40% fewer gross adds. Given the targeted 6-month ramp to full productivity for new “2.0” reps, we do not expect to see many of the benefits associated with this shift toward tech-dependent customers until 2H12." Deutsche Bank maintains its Hold rating on Cbeyond, which closed yesterday at $6.56.