Is Cbeyond (CBEY) the subject of an undisclosed Law Enforcement Investigation? Citron Has the Docs.


Cbeyond (NASDAQ:CBEY) Relevant Highlights:

Shares Outstanding 28.7 m
Recent Market Cap 410.8 m
Trailing P/E 154
Forward P/E 102
Ttm Earnings Per Share .13
Current Cash Burn Rate $9m – $10m per year

Three weeks ago, Citron introduced readers to Cbeyond (NASDAQ:CBEY), a sales company offering bundled telecommunications services specializing in small business customers.  Citron’s inquiry focused on indicators of stalling growth and failure to gain traction in new markets to match the company’s results in its flagship city markets earlier in the decade. Read more

Citron Research Reports on Vistaprint (VPRT)

What are you going to do if 44% of your net income disappears?

For the past few years, Vistaprint has been a controversial name amongst investors.  On one hand you have a printing servicing company that provides printed products to small business at an affordable price.   But on the other hand, you have a company with a dirty secret which derives a large portion of its income from “referral fees” – from companies that offer web loyalty shopping clubs, or in layman terms, those $14.95 a month charges on your credit card bill that leave you scratching your head.

The word “referral” sounds innocent enough, but in real terms, as a consumer, when you complete an online purchase, you are shown a button saying something like “Save $10 on your Next Purchase from this Company”.  Beware!  If you click, even accidentally, your full contact info, but worse, your credit card information, is sent on without your permission to a 3rd party company you haven’t given your permission to.  From that point, the debate rages about how many of these charges represent trickery, and how many more are simply fabricated without the consumer’s consent or knowledge. Read more

Citron Research Reports on Cbeyond Inc. (NASDAQ:CBEY)


Citron asks:  Can Investors “See Beyond” market hype, and get to the cold truth about CBEY? 

Not truly a high-tech company, Cbeyond’s business model is in fact a sales organization selling a product that is no longer unique.  It provides bundled telecomm services to small to mid-size companies (generally 4 to 100 lines) in a package.  This includes business phone, long distance, internet, mobile phone, website hosting, voicemail, and optional services. Their business plan is centered on hiring a sales force of ambitious young people who actually go knocking door to door in office parks to solicit customers, incentivized by big commissions for reeling in new customers on three year contracts. 

Citron believes the growth story the company wants Wall St. to believe is pure fiction.  Adjust it to reality, and you have a low-or-no-growth company with sustainable market presence in only 3 or 4 cities, selling for a PE of over 100.  From this precarious point, the stock could fall by 2/3rds and still be seriously overpriced. Read more