The Internet Incubator You Haven't Heard of

LAGUNA NIGUEL, Calif. -- Incubators are the rage among fledgling Internet investors, and why not? Newbie investors don't know how to pick stocks and they can't get access to the coveted initial public offerings. So shares of incubators -- companies that sift through the start-ups and spit out the worthy ones as IPOs -- offer a tempting promise. Consequently, the ranks of companies known as incubators (some new, some recently repositioned this way) have been multiplying faster than "Millionaire" game shows.

Shares of CMGI (CMGI Quote), Internet Capital Group (ICGE Quote), Point West Capital (PWCC Quote), Rare Medium Group (RRRR Quote), Safeguard Scientific (SFE Quote) and Winfield Capital Group (WCAP Quote) have all blossomed as investors have discovered the companies' charms.

But another incubator -- one with a longer track record but not on Wall Street's radar -- is about to join the Internet fold. Anaheim, Calif.-based Odetics (ODETA Quote) is quietly building a small portfolio of technology companies. And by almost any standard, Odetics, with a $172 million market cap, is undervalued. After an impressive disk-drive spinoff in 1997, Odetics is about to spin off its high-tech automobile software company Iteris, set to be valued at roughly $200 million. ...