HOUSTON, July 15 /PRNewswire/ -- Riley Capital Research has initiated
coverage of Zapata Corp. (NYSE: ZAP) with a "Strong Buy" rating.
"If Avram Glazer attains his ambitious goal of building the future ZAP
Internet spin-off into a major portal, content, and e-commerce company,
investors could see the value of that entity match or exceed the one to
two billion dollar market caps achieved by other portals such as Lycos
(Nasdaq: LCOS), Infoseek (Nasdaq: SEEK), and Excite (Nasdaq: XCIT).
Such a valuation on top of Zapata's current cash and non-Internet
holdings could imply a share price increase of more than $80 from last
night's closing price of $21-5/8," says Mr. Louis Riley, principal of
Riley Capital Research.
"Zapata Corp.'s new Internet conglomerate strategy currently offers
investors an opportunity to buy a diversified portfolio of previously
privately held Internet companies without paying the typically rich
market valuations similar public companies command today. In addition,
melding these companies together in ZAP will hopefully create synergies
that create even more value for shareholders."
"Zapata president and CEO Avram Glazer has compared Zapata's current
holding company structure to that of Warren Buffet's Berkshire
Hathaway. But Mr. Glazer's vision for ZAP's Zap.com portal site seems
more akin to that of John D. Rockefeller's vision for Standard Oil.
Mr. Glazer envisions a vertically integrated "portal plus" that not
only captures eyeballs at the point of initial interface, but that also
retains those eyeballs via links to content and commerce sites that are
also owned by ZAP. Such a strategy, if successful, might generate
profits much sooner than other portals' models as ZAP may control a
greater percentage of the e-commerce and advertising revenue that its
portal facilitates."
"Zapata's burgeoning website portfolio possesses many attributes that
Internet investors seek. CoolChat's coolchat.com )
fast-growing 300,000 member community, Advancing Women's
advancingwomen.com ) highly targeted audience, and Daily
Stocks' dailystocks.com ) affluent daily readership are just
a few examples of Zapata's prime holdings. Many of their sites generate
excellent "stickiness" as their viewers repeatedly return to visit.
Free e-mail and personal web pages should also help ramp up Zap.com's
membership rolls and stickiness metrics."
"Zapata is yet another intriguing emerging Internet company that has
almost no Wall Street sell-side research coverage or sponsorship. The
lone sell-side analyst that follows the company does so by virtue of
the Omega Protein (NYSE: OME) spin-off. However, while the
entrepreneurial Mr. Glazer has negotiated Zapata's current pending
acquisitions himself, it seems highly probable that an investment bank
may be retained in the future to advise the company, especially in
light of the failed bid for Excite."
"In conclusion, we believe Mr. Glazer may indeed realize his ambitious
vision to build a major Internet company that rivals today's biggest
players. Yet at last night's closing price Zapata's Internet business
was being valued for only a little more than $4 a share. We think
Zapata shares offer enormous upside potential with a high margin of
safety at these price levels."
Riley Capital Research is a research boutique that specializes in
highlighting investment opportunities that have frequently been
overlooked by most investors and that are not followed by the majority
of Wall Street sell-side research organizations.
This report contains information obtained from sources which we
believe to be reliable, but its accuracy is not guaranteed. Certain
matters described in this report are forward-looking statements and are
subject to risks and uncertainties that could cause actual results to
differ materially from those projected. Opinions expressed are subject
to change without notice. This report should not be construed as a
solicitation or offer of any kind. Neither Riley Capital Research nor
any of its affiliates received any compensation of any kind for the
opinions expressed herein. Mr. Riley and affiliates of Riley Capital
Research currently hold positions consistent with the above rating.
SOURCE Riley Capital Research
-0- 07/15/98 /CONTACT: Louis Riley of
Riley Capital Research, 281-996-1742/
(ZAP LCOS SEEK XCIT OME)
CO: Riley Capital Research; Zapata Corp.; Omega Protein; Lycos;
Infoseek;
Excite ST: Texas IN: FIN MLM SU: RTG
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