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

To: Brasco One who wrote (1807)	11/16/2000 11:09:58 AM
From: Platter	Respond to of 1884

New Media Notebook: Digital Island Floats a Cash-Crunch Plan By George Mannes Senior Writer Street.com 11/16/00 10:12 AM ET Weighing down the shares of many publicly traded Internet companies is the fear that the enterprise will run out of cash before it reaches the end of the mythical path to profitability. But you've just got to deal with it, says Ruann Ernst, chairman of Internet infrastructure services firm Digital Island (ISLD:Nasdaq - news). I Am a Rock Digital Island forges on. Ernst is getting a view of the issue up close. Digital Island closed Wednesday at a near-52-week low of $8.25, well off its 1999 high of $156.94. "It is very clear the market is jittery today" about companies' getting enough funds to become cash flow positive from operations, Ernst says. "There's a legitimate market concern, considering how many nonviable business models there are out there." Digital Island is telling the Street it has about six quarters of cash itself. But Ernst says the company has plenty of options between now and then. First, she points out, "Six quarters is an eternity," suggesting that the capital markets, which have gone bone-dry over the past six months, could very well start gushing again. The company can also cut costs, she says, by delaying new projects and wringing more efficiencies out if its data network, Digital Island can spend less capital expenditures than it expected. And, finally, it can get money from strategic partnerships, or investments from business partners. Over the past fiscal year, in fact, Digital Island raised $95 million from strategic partners, and should other capital markets stay closed, that continues to look like a promising area for funding, she says. So what makes her company's business model a viable one? Its traction against a business plan, she says -- adding new customers, lowering the cost per customer and not letting revenue per customer fall. Year by year, quarter by quarter, the company has shown progress against its plan. Further assumptions about the company's growth aren't based on a dream, but on reality, she says.