Digital Island Inc. –

SAN FRANCISCO – Digital Island Inc., a global business network, held an initial public offering June 29, offering 6 million shares at $10 apiece. The company’s stock priced at the low end of its $10 to $12 filing range.

Bear, Stearns & Co. Inc., Lehman Brothers and Thomas Weisel Partners L.L.C. underwrote the initial public offering, which left 33.97 million shares outstanding.

There were no selling shareholders. Crosspoint Venture Partners, Chase Capital Partners, Vanguard V, Crescendo Venture Management, E*Trade Group Inc., Tudor Global Trading Inc., FW Ventures III and Merrill Lynch KECALP were venture backers.

Digital Island’s services make it easier for companies to globalize their operations and to provide a higher quality of service and more functions than they would be able to on the public Internet. The company targets businesses that rely on the Internet to conduct business but are constrained by its unreliability, slow performance and limited range of functions. Digital Island’s global private network allows customers to effectively deploy and manage global applications by combining the reliability, performance and broad range of functions available in private intranets with the global access of the World Wide Web.

The $54.8 million in proceeds generated by the offering will be used for general corporate purposes.

The company has not been profitable in the past two years, losing $16.8 million in 1998 and $5.3 million in 1997.

Cliff Higgerson, a general partner of Vanguard V before forming Communications Ventures II in 1997, joined Digital Island’s board of directors in March 1997, followed by David Spreng, managing general partner of Crescendo Venture Management, Christos Cotsakos, president and chief executive of E*Trade, and Shannon Soghikian, a general partner of Chase Capital.

Digital Island – Selected Financial

(in thousands, except per share data)

Year Ended September 30, Six Months Ended March 31,

1997 1998 1998 1999

Revenue 218 2,343 691 3,795

Net loss -5,289 -16,764 -6,793 -14,869

Net loss per share -3.53 -7.50 -3.07 -6.28