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Digital Island slips deeper into the red

Digital Island Inc. (Nasdaq: ISLD) posted a much wider-than-expected loss in its third quarter Tuesday, losing $14 million, or $3.96 a share, on sales of $3.7 million.

Its shares closed off 2 11/16 to 16 3/8 ahead of the earnings report.

A survey of analysts by First Call Corp. pegged Digital Island for a loss of 47 cents a share in the quarter.

The $3.7 million in sales represents a 410 percent improvement versus the year-ago quarter when it lost $4.2 million, or $1.92 a share, on sales of $725,000.

"Our outstanding quarterly results demonstrate significant progress as measured by the main metrics of our business," said CEO Ruann Ernst in a prepared release. "In the quarter we increased our customer base by 31 percent to 81."

After raising more than $69 million in its June initial public offering, the stock surged to a high of 40 7/16.

Both analysts following the stock maintain a "buy" recommendation.