Bucking the growing "bricks and clicks" trend in the mortgage industry, AppOnline.com Inc. of Melville, N.Y., has announced plans to separate its branch and Internet operations in two companies.

The lender said it would spin off its Internet operation into a newly formed company through an initial public offering this summer. The remaining AppOnline operation, Island Mortgage, which has 58 offices in 22 states and focuses on FHA, VA, and subprime loans, is to be given a name that reflects its low-tech approach.

The new Internet company, AppOnline, is to be independent, with its own board of directors and officers, and Apponline shareholders are to own a majority of the venture.

"My shareholders will now have two public companies instead of one," said Edward Capuano, chief executive officer of AppOnline. "I can unlock the value of the online business. It's a better deal for the stockholders." AppOnline, whose stock price wallowed below $5 for most of last year, was trading between $3 and $4 this week.

AppOnline this week announced a deal for Cyber Media Group, which it plans to spin off in ApplyOnline. Cyber Media owns Mortgage Expo.com, an aggregate Web site where many lenders offer loans, which is to be a large component of ApplyOnline. "This acquisition puts the whole package together," Mr. Capuano said. "It's like having your own LendingTree."

The IPO is designed to take advantage of the high value investors have placed on technology companies, pushing many of them to stratospheric market values. But the strategy may also break up a model that several analysts view as the only long-term path to profitability.

"I think that the future is bricks and clicks," said Nick Karris, a mortgage analyst at Gomez Advisors. "The ultimate winners in the space, the companies that garner the most market share, will maintain both an online and offline presence."

What's more, Mr. Capuano may be a little late to capitalize on the market's love affair with Internet-related IPOs, which appears to have cooled lately. Nasdaq's full-throttle rise began sputtering last week - the technology-heavy index lost 9% of its value from March 10 to March 15 before rebounding slightly.

The market's high valuation of the tech sector, which includes many companies that have never shown a profit, has inspired analysts' perplexity, investors' glee, and many old-economy companies' ire.

Mr. Capuano said Apponline will maintain a limited Web presence but will pass most such activities to the new company. "We're taking the assets from the Web division, everything, and forming the new company," he said.

He added that AppOnline will continue to grow through acquisition - as in the purchase of Western National Funding of Orange, Calif., last week. AppOnline will also continue acquiring Internet-related companies, he said.

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