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Zapata's next shot at the Net

Zapata, which failed to buy Internet directory Excite, will split itself into two companies--one focusing solely on the Net.

Zapata, which failed to buy Internet directory Excite in May, said today that it will split itself into two companies--one focusing solely on the Net.

The news drove up the company's stock by more than 10 points to 20.25, with almost 10 million shares trading hands.

Zapata said one company will be called Zap and focus on becoming a "cutting-edge portal [site]," while the other will be called Zapata and concentrate on marine protein and food packaging--its more established businesses.

The company said it will consider an initial public offering, spin-off, or other alternatives for Zap, its Internet business.

Zapata added today that it may repurchase as many as 5 million shares of its stock.

As part of its Internet strategy, the company said it had inked letters of intent to buy or invest in 21 Internet sites, including Chat Planet, TravelPage, and DailyStocks. Zapata noted it had signed additional letters of intent "that aren't being made public at this time."

The company also vowed to "explore strategic partnerships" with "media and other companies," according to chief executive Avram Glazer. It did not identify them.

The actions of Zapata, once an oil-drilling company, comes amid an unprecedented run-up in Internet stocks. The surge has made billionaires out of young executives such as chief executive Jeff Bezos and Yahoo cofounder David Filo, at least on paper. It also has surprised many long-time Wall Street stock pickers, who missed out on the run-up because they thought the shares were overvalued.

Many of the companies have been public for just one or two years, but the IPO filings--from GeoCities and CitySearch for example--keep coming.

The company started its Internet initiative barely two months ago. Its stock more than doubled at that time but has since leveled off to about $10 per share.

In April, the company announced that it would acquire the online magazines Word and Charged. The purchases followed Zapata's announced plans to initiate a strategic thrust to acquire and consolidate Internet and e-mail commerce business.

In May, Zapata made an unsolicited bid valued at $72 per share for Excite. It was rejected by Excite, which said their was no "synergy" between the two companies. A spokeswoman at Excite dubbed Zapata's bid a "publicity stunt."

Deutsche Bank reiterated its "buy" rating today on Zapata, pegging its price target on the stock to $24 a share.