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Cbeyond Confirms Layoffs, But Won't Talk Sale Rumors

February 03, 2014 - News

Georgia-based Cbeyond Inc. has joined the ranks of providers that have cut jobs so far this year.

Cbeyond in January laid off about 100 employees, or 7 percent of its workforce, The Atlanta Business Chronicle is reporting. A spokeswoman confirmed the job cuts, telling the Chronicle that they were part of a plan to “rebalance … resources." The cuts pertain to Cbeyond’s transition from telephony to managed cloud services provider.

In addition to Cbeyond, EarthLink, Sprint and XO also have implemented layoffs this year, citing reasons similar to Cbeyond’s.

But there may be more in store for Cbeyond.

The Chronicle, quoting an unnamed source, reports that Cbeyond will cut senior management jobs throughout the rest of this quarter as it prepares for a sale. A spokeswoman would not confirm the speculation. The Chronicle said MegaPath Corp., already a managed services provider, appears to be Cbeyond’s main suitor but both companies declined to comment.

As the Chronicle pointed out, a Cbeyond purchase, which would not come cheap, would double MegaPath’s revenue and give California-based MegaPath a stock listing.

A Cbeyond sale further would not come as a surprise. In its third-quarter 2013 earnings report, Cbeyond wrote that it had formed a committee to evaluate “strategic alternatives," including acquisitions or a sale. Cbeyond reported a $5.3 million net loss in that quarter, compared to a profit of $1.9 million in the same period the year before. Its stock also has lost 20 percent of its value in the past year.

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