Done right, the Internet can be deadly for traditional brick-and-mortar businesses. (NASDAQ:AMZN) disrupted retailing, eBay (NASDAQ:EBAY) disrupted auctions, InterActiveCorp's (NASDAQ:IACI) Expedia disrupted the travel agencies, and so on.

Now ZipRealty (NASDAQ:ZIPR) wants to do the same to residential real estate. But given Wall Street's reaction to the company's recent earnings report, it may have some work left to do.

The company has developed for itself a hybrid model that combines elements of the brick-and-mortar world with online technologies. It's similar to the approach of, say, Netflix (NASDAQ:NFLX).

Here's how it works: ZipRealty is a full-service residential real estate broker. It has a growing number of human real estate agents, called ZipAgents, who, unlike those in traditional real estate brokerages, are paid a salary. The company uses its Web presence to provide sufficient client leads to its ZipAgents.

ZipRealty's comprehensive website gives prospective clients full access to local multiple listing services. Its agents, in turn, use sophisticated customer relationship management software to better serve their clients. The company passes on to its clients any savings generated by the efficiency of the software technology.

Last week's quarterly report suggests that the concept seems to be working. In the fourth quarter, revenues increased 89% from the year-ago quarter to $17.5 million. Net income was $900,000, up from $200,000 in the fourth quarter of 2003. The company is liquid, with roughly $83.5 million in the bank. ZipRealty's guidance for 2005 includes revenues of $97 million to $102 million, with net income of $0.36 to $0.40 per diluted share.

Although these are impressive numbers, Wall Street was expecting even more. As a result, the stock price tanked 9% to $15.96.

The real estate industry is seasonally slow in the first quarter, and ZipRealty is no different. For trigger-happy Internet investors, any wait is an eternity. But for long-term investors, ZipRealty is a way to play a company attempting to disrupt a mature industry. And there is certainly room for upside in this massive $60 billion industry.

Fool contributor Tom Taulli owns shares of eBay.