Barry Diller’s decision, announced today, to split IAC/InterActiveCorp into five parts says a lot about Mr. Diller’s restlessness. But it also shows the flaws in the strategy that he has been trying to pursue for a decade: building an Internet conglomerate.

Barry Diller is addicted to deals. He has done some really good ones and very few really bad ones. He was particularly effective in building Expedia into the leading Internet travel company. Then he spun that out, as the travel business got tougher.

It’s not so clear that Mr. Diller is particularly good at running companies, or more particularly, helping companies grow companies so that they can take advantage of the ever changing Internet marketplace. There have been no homegrown hits at IAC, and some key misses. Citysearch, which is one of his oldest Internet acquisitions, has let Google and Yahoo take the lead in local information and advertising.

To be fair, nobody else has proven to be any better at buying and building Internet companies. Yahoo did well with some of its search acquisitions, but others, like HotJobs, have languished.

The bigger question is whether it is possible for anyone to build the General Electric of the Internet, as Mr. Diller was trying to do. The stock market won’t let it happen. When an Internet company becomes a hit, it grows so rapidly, and investors get so excited about its possibilities, that its value as an independent company can be enormous. Look no further than the $15 billion valuation Microsoft agreed to for Facebook.

Companies like that need to be independent so they can use their high value to raise capital cheaply and make acquisitions with their highly priced shares.

If a rapidly growing company is lost inside a conglomerate that also includes slow and steady units, it is starved for the resources and attention it could get on its own.

In Mr. Diller’s case, it is the search business that has some potential for major growth or as an acquisition target at an unusually high premium. The other units will likely wind up inside companies with more similar growth rates, HSN in a media company, LendingTree in a financial services group, etc.

What happens to Mr. Diller is unclear. His IAC shares will probably be worth more this way. But Ask, which he will continue to run, will be much smaller, and perhaps less of a platform for grand deals. But then he is very good at those.