UPDATE 1-Cbeyond Q2 profit lags Street view, cuts 08 revenue

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Aug 6 (Reuters) - Cbeyond Inc (CBEY.O), which provides broadband services to small businesses, reported a fall in quarterly profit hurt by an increase in expenses and tax rates. The company also cut its 2008 revenue forecast and said it now expects revenue in the range of $350 million to $355 million.

Analysts were expecting revenue of $352.2 million for 2008.

Cbeyond, which targets businesses with five to 249 employees in large metropolitan cities, earned $496,000, or 2 cents a share, for the second quarter, compared with $2.9 million, or 10 cents a share, in the year-ago period.

The Atlanta, Georgia-based company's revenue rose by about 26 percent to $85.1 million, in line with market expectations.

Analysts on average were expecting earnings of 4 cents a share, before items, on revenue of $85.1 million, according to Reuters Estimates.

The average monthly revenue per customer location (ARPU) rose by about a percent to $754.

Churn rate, a measure of customer attrition, rose to 1.3 percent in the second quarter, compared with 1 percent a year earlier.

The company expects customer churn to decline in view of the improvements in receivables, indicating a strengthened customer base.

Shares of the company closed up 2.4 percent at $15.21 on Wednesday on Nasdaq. (Reporting by Kuganandhan Paramanandan in Bangalore; Editing by Anil D'Silva )