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Digital Island gets a boost
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June 20, 2000: 2:10 p.m. ET
Content-delivery service provider to expand with big-name partners
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NEW YORK (CNNfn) - Digital Island Inc. got a boost Tuesday after it unveiled plans to extend the streaming media capabilities of its network infrastructure in partnership with three tech heavyweights.
The news sent shares of the Internet content distributor sharply higher, soaring 10-1/2 to 45, a 30.4 percent advance.
Computer hardware supplier Compaq Computer Corp., semiconductor maker Intel Corp. and software giant Microsoft Corp. will make a combined $45 million equity investment in Digital Island to support its network expansion, the companies said. Specific terms of those investments were not disclosed.
Additionally, Compaq Financial Services said it will provide $50 million in equipment lease financing to Digital Island to be used to deploy Compaq servers.
 San Francisco-based Digital Island (ISLD: Research, Estimates) leases dedicated telecommunications circuits through which it operates a private computer network for its customers. The company also hosts Web sites on that network, which operate faster and more reliably than those that are hosted on the public Internet.
In April, Digital Island reported fiscal second-quarter revenue of $11.3 million and a net loss of $92.7 million, or $1.49 per share. Analysts expect that loss to widen to $1.56 per share during the current quarter.
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With its partners, each of which is a leader in its respective field, Digital Island is aiming to extend its network infrastructure to provide broadcast-scale streaming media - up to 7.5 million simultaneous media streams - over the Internet.
Executives at Digital Island expect the network expansion, which will take place over the next two years, to increase the streaming and transactional capacity of its "e-Business Delivery Network," a collection of hosting, network, content delivery and application services for companies engaged in interactive electronic commerce.
"The Internet is all about interactivity, and e-business is about the end-user experience," said Digital Island Chairman and Chief Executive Ruann F. Ernst. "Users want the most compelling interactions, which means rich media must be a part of the experience."
Customers such as entertainment companies, financial service groups, publishing firms and others with more elaborate Internet content will benefit most from the expanded capabilities, Ernst said.
Digital Island's network has been built using Compaq (CPQ: Research, Estimates) ProLiant servers with Intel (INTC: Research, Estimates) microprocessors, and the company has committed to deploy as many as 8,000 servers worldwide.
The expanded network will be powered by Microsoft's (MSFT: Research, Estimates) Windows 2000 Server operating system and its Windows Media technology.
In Tuesday afternoon trading, shares of Microsoft were up 1-1/16, or 1.4 percent, at 74-3/4. Compaq added 1/2 to stand at 27-15/16, a 1.8 percent gain. Intel shares rose 2-3/4, trading 2 percent higher at 139-1/4. 
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Digital Island
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