Zapata's promises draw groans from skeptics

Zapata, which attempted to buy Excite and signed letters of intent to acquire 31 Internet properties last year and then backed out in October, is now aggressively seeking new deals.

Along with a message on its Zap.com Web site, the company took out an ad in The Wall Street Journal recently looking for Web sites to acquire to be part of its upcoming network.

"Your Web site may be worth millions!" says a message posted to Zap.com.

"We will soon be launching the all-new Zap.com Network," the message continues. "Your Web site may be worth millions if it reaches more than 25,000 unique users per month."

Zapata declined comment.

Along with Word and Charged, two of the Net's early e-zines that Zap rescued after they were shuttered in March 1998 by parent Icon CMT Corporation, the Zap.com site features links to PixelTime, a site that offers a Java-based paint program and other art features, and Phantom Menace News, a site that aggregates articles about the upcoming Star Wars prequel.

But the company's on again-off again Internet plans are meeting with skepticism.

"I'll believe it when I see it," Lisa Allen, an analyst with Forrester Research, said about the Zap.com portal. "Haven't we been down this road before?"

Along with the firm's damaged credibility from backing out of the earlier deals, Allen questioned Zapata's ability to enter the online space in a portal capacity.

"What kind of companies are going to answer these ads?" Allen said. "Maybe there are some diamonds in the rough out there, but why should I think a company like this would know a good site from a bad one?"

Patrick Keane, an analyst with Jupiter Communications, questioned the value of what he called Zap's "Frankenstein approach" to building its network.

"I don't see how their strategy of investing in all these middle-tier or bottom-tier Web sites is going to establish them as a portal," he said.

Both analysts also pointed to Zap's late entry into the space.

"If they think being a portal is the road to riches, they should look around at the very crowded portal space and think again," Allen said.

"They saw the tremendous value enjoyed by the portals, and that's clearly why they're entering this business," Keane said, adding that the portal battle is "essentially over."

Still, editors at Word and Charged said they are happy working under the Zapata umbrella. The company bought the sites from Icon CMT for $2 million in April 1998.

"We're doing really well," said Alice Bradley, editor in chief of extreme sports site Charged. Since Zapata took over, "we've had the ability to hire more people, which we needed to do very badly. And we've been given so much freedom with our creative decisions."

Marisa Bowe, editor in chief of culture zine Word, added that Zapata "doesn't pretend to be experts in all the businesses they're in--they're just investors."

Bowe said Word recently reached a deal with Crown Books to publish a book of columns from the zine that will bring the site a sum "in the high five figures."

Both editors conceded that the sites' traffic figures were relatively low and that they are not bringing in revenue. Bradley pointed out that Charged only recently hired an ad sales person. Both editors declined to disclose specific traffic or financial data.

But Zapata's ever-changing Net strategy has not been without external wrangling. Just weeks after Zapata announced it was backing out of its Net plans in October 1998, the company was slapped with a shareholder suit charging that Zapata executives made false and misleading statements about implementing the Internet strategy.

A class-action lawsuit also was filed on behalf of all purchasers of the common stock of Zapata from July 6, 1998, through October 15, 1998.

Moreover, although announcements about Internet deals sent Zapata's stock soaring last year, Wall Street may be more wary now.

"Show me something," analyst Allen said. "They're looking for the money? I'm looking for signs that they're serious. There's no there there."