Digital Island Sinks on Loss, Layoffs, CFO Exit

Digital Island (Nasdaq: ISLD) fell 54 U.S. cents to $1.93 in morning trading Tuesday after the company,which provides Internet infrastructure software and content delivery, said its loss for the second quarterended March 31st was wider than a year earlier.

In addition, the company announced plans to cut more jobs, and said its chief financial officer has resigned.

“The slowdown in both the economy and technology spending resulted in fewernew customer wins during the quarter, but this was offset by strongrecurring revenue from our top enterprise customers,” said chairman andchief executive officer Ruann Ernst.

San Francisco, California-based Digital Island reported a loss beforeinterest, taxes, depreciation and amortization of $59.9 million, or 76 centsper share, for the fiscal second quarter, compared with an EBITDA loss of$35.9 million, or 58 cents, in the same period a year earlier.

Revenue roseto $32.8 million from $11.3 million. The net loss widened to $1.19 billion,or $15.11 per share, from $92.7 million, or $1.49.

Digital Island CFO Tom Thompson resigned for personal reasons, and is being replaced bytreasurer Addo Barrows “on an interim basis,” the company said.

Digital Island said it has cut 12 percent of its workforce so far this year,and plans to lay off another 10 percent by June 30th as it tries to cutcosts and stay on the path to profitability.

Ernst said that the cuts “do notimpact resources in the critical areas of innovation and customer growth andsupport.”

According to Ernst, the company continues “to make substantial progress” in its key markets of financial services, media andentertainment, and high technology.

The company said it added a number of “significant” customers, including ABNAmro, JP Morgan Chase and Microsoft, during the quarter, and has now”penetrated” 19 of the top 50 companies in its key markets.

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