Digital Island Sinks on Executive Exit

Digital Island, Inc. (Nasdaq: ISLD) slipped 0.09 to 4.66 Friday after the company said its president is leaving to join a venture capital firm.

Leo Spiegel said he will leave the San Francisco, California-based Internet services company to take a position with Mission Ventures in San Diego, California and be closer to his family.

Chairman and chief executive officer Ruann F. Ernst will assume the title of president, Digital Island said. Vice president Chris Albinson will become chief strategy officer, assuming Spiegel's corporate development duties. Albinson has directed the company's acquisitions of Sandpiper Networks, Live On Line and SoftAware, as well as deals with Compaq, Intel (Nasdaq: INTC), Microsoft (Nasdaq: MSFT), Sun Microsystems and Inktomi.

Though Spiegel is resigning from the company's board, he will serve as chairman of Digital Island's strategic advisory board.

"As Digital Island matures, it's less in need of the start-up counsel that I can now share with some much earlier-stage companies," Spiegel said. "I remain confident in both the strategy and management team of Digital Island and look forward to working together in my new capacity as the chairman of the strategic advisory board."

Digital Island provides networking and content delivery services for e-commerce. The company reported a third-quarter loss of US$113 million, or $1.60 per share, compared with a loss of $22 million, or 62 cents, in the same quarter a year earlier. At the same time, revenue climbed to $24.1 million from $4.9 million.

Ernst said the company has almost 1,000 customers, with large and mid-sized companies accounting for 75 percent of revenue.

Digital Island is predicting a fourth-quarter loss of $1.80 to $1.85 per share on revenue of about $31 million, and says it expects to break even before extraordinary items in the quarter ending in December 2002.