UPDATE 1-Cbeyond Q4 profit rises; '08 revenue view below Street

(Adds details from quarter)

Feb 21 (Reuters) - Cbeyond Inc (CBEY.O: Quote, Profile, Research), which provides broadband services to small businesses, reported an increase in quarterly profit but said the weak economy is taking a toll as it had to disconnect 300 customers for non-payment.

The company, which is tightening its credit policies, expects this trend to continue through the first quarter of 2008 as it filters out its weakest credit, non-paying customers.

Shares of the company fell more than 20 percent to $18.87 in trade after the closing bell.

The company also forecast a 2008 revenue outlook below market expectations, with a range of $355 million to $360 million. Analysts expect revenue of $360.22 million.

Cbeyond, which targets businesses with five to 249 employees in large metropolitan cities, said its fourth quarter net income rose to $12.5 million or 44 cents a share, compared with $4.3 million or 16 cents a share, in the year-ago quarter.

The company earned 13 cents a share, before special items, according to Reuters Estimates. Cbeyond did not disclose its operating earnings per share figure in a statement.

The Atlanta, Georgia-based company's revenue rose 30.6 percent to $76.9 million, beating market expectations of $76.76 million. Churn rate, a measure of customer attrition, rose to 1.4 percent in the fourth quarter.

The company expects customer churn to continue at this level through the first quarter of 2008 and view these two quarters as a transition not reflective of future results. (Reporting by Shradhha Sharma in Bangalore; Editing by Bernard Orr)