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Technology Stocks : Digital Island,Inc - (Nasdaq- ISLD) -- Ignore unavailable to you. Want to Upgrade?

To: Sosmartinov who wrote (1780)	10/7/2000 2:47:56 PM
From: Guardian	Respond to of 1884

Digital Island Sub Notes Rated CCC By S&P Dow Jones Newswires NEW YORK -- Standard & Poor's assigned its single-B-minus corporate credit and triple-C subordinated note ratings to Digital Island Thursday. The outlook is stable. San Francisco, California-based Digital Island provides content delivery, network management, Web-hosting and other Internet-related services to large and medium-size businesses, particularly in the financial services and entertainment industries. S&P said the ratings reflect an unproven business model and short operating history in the competitive and rapidly evolving market for Internet services. These concerns are only modestly tempered by robust demand for content delivery and associated Internet services. Management's strategic focus is to provide integrated Web-hosting, content distribution, streaming media and other services for its customers, S&P said. Providing such a broad array of Internet services is expected to challenge management and Digital Island's resources. In addition, S&P said it believes the four-year-old company's business model, which has yet to achieve scale in its operations, is subject to rapid technological change. Customer concentration is also a concern, with more than 20% of sales from one customer. Also the competitive environment may intensify as larger, well-capitalized telecommunications service providers and services organization aggressively expand in the Web-hosting market. S&P added, however, that Digital Island is among the leaders in providing content delivery services, and its business model seeks to develop long-term contractual relationships with its customers by emphasizing high service levels. Despite rapid sales growth, revenues are still quite small, according to S&P, at $40 million for the 12 months ended June 2000. Management does not expect to achieve profitability until 2003 and operating losses are likely to expand until mid 2001. Digital Island has a highly leveraged financial profile, with more than $345 million in convertible debt. S&P said the ratings are constrained by the company's limited scale of operations and track record. Cash balances available to fund the anticipated operating losses as well as favorable demand for Internet services provide ratings support over the intermediate term as Digital Island executes its still unproven business plan, the agency added. Briefing Book for: ISLD