Net Plan Lifts Zapata; Analyst Says It’s Fishy

How weird is this whole Internet-stock thing getting? Consider:

Zapata Corp. shares more than doubled Wednesday after the Houston-based fish oil and meat casings company said it’s returning to the Internet business--just two months after it canceled its planned cyber-expansion as financial markets soured.

Zapata, which said in October it was backing out of its planned purchase of or investment in about 30 Internet firms, saw its shares zoom $7.06 to $14.25 on the New York Stock Exchange after it reversed itself yet again.

Zapata’s interest in the Internet business has ebbed and flowed with investor enthusiasm for Web-related stocks. In May, the company made a failed $1.7-billion bid for No. 2 Internet directory Excite Inc.

Then, Zapata’s shares surged to a 10-year high of $24.94 in July after it said it planned to acquire Web sites and start an online portal.

The stock plunged again when Zapata reevaluated its strategy in October and decided the Net business wasn’t for it after all.

“Since we began our strategic review two months ago, global financial markets have strengthened dramatically and the Internet sector, in particular, has been positively impacted,” Zapata President Avram Glazer said in a statement.

In recent weeks, optimism for online holiday shopping has fueled a fresh surge in shares of such companies as top Internet retailer Amazon.com and online auctioneers EBay Inc. and UBid Inc.

Not surprisingly, one analyst questioned Zapata’s change of heart.

“It’s bordering on fraudulent,” said Patrick Keane, a senior analyst at Jupiter Communications. “They’re boosting their stock price by press releases, and the sobering fact is it’s working.”

Keane said Zapata lost credibility when it scuttled its original Internet expansion two months ago, leaving dozens of small Web companies holding almost worthless letters of intent. At the time, Zapata told the companies it had been negotiating with that it might reconsider buying or investing in them after markets became more stable.

“How can you trust them after that?” Keane said. “Companies should be aware if Mr. Glazer knocks on their door offering to write a big check. Who’s to say they won’t do it again?”

Keane compared Zapata’s Internet strategy to Dr. Frankenstein’s creature, a patchwork collage of middle-tier Web sites cobbled together in the likeness of an Internet business.

Zapata said its new Internet effort will focus on the development of an Internet-related brand name and a network of sites. In the past, it has said it would bundle its Internet companies into a subsidiary, called Zap Corp., and possibly hold an initial public offering or spin it off to shareholders.

Zapata executives weren’t immediately available to comment.

The company said in its statement that it will open a new Zap.com Web page in the next few weeks and will “review the possible relationships, alliances and agreements with various Internet companies and e-commerce businesses.”

For now, Zapata owns a packaging company, a fleet of fishing boats and several processing plants that make fish meal and oil used in animal feed.