SAN FRANCISCO -- Investment conferences are all about finding new investment ideas -- or rediscovering old ones. When the market is as beaten down as it is at this week's

Chase H&Q Tech Conference

, it makes sense to be on the hunt for "value" plays.

This year, the story to look for is that of a boring but profitable company whose shares are down -- rather than one of the wounded highfliers that had not shown signs of reaching profitability before the

Nasdaq

meltdown. An example is

Power Integrations

(POWI) - Get Report

, a maker of integrated circuits that go into power-conversion components like the charger for a cellular telephone. Its management presented Monday afternoon at the conference.

After losing half of their value in the few days after a warning of a first-quarter revenue shortfall, shares of Power Integrations, based in Sunnyvale, Calif., now trade for 25 times Wall Street's estimates of 2001 earnings of 93 cents per share. Considering that the same analysts think this company's earnings will grow about 21% from 2000 to 2001, Power Integrations is about as close as one will come to a true tech value.

Power Integrations has a good story to tell -- and did so at H&Q. But there are also many questions, as the unenthusiastic response to its presentation indicated. It faces stiff competition from

Fairchild Semiconductor

(FCS)

,

STMicroelectronics

(STM) - Get Report

,

On Semiconductor

(ONNN)

(the newly public former unit of

Motorola

(MOT)

), as well as a legion of cheap chipmakers.

With all that competition, the company can't charge a huge premium for its cutting-edge integrated circuits, so Power Integrations tries to maintain its profit margins of 50%-plus only by lowering costs. What's more, until recently, the company was embroiled in a patent-infringement suit with Motorola. POWI zapped Motorola by prevailing in the litigation, but not before Motorola helped slam shares of Power Integrations.

The carnage began on March 24, when Power Integrations announced it had settled the suit with Motorola, with which it also had made a new supply agreement. But the bigger company had slowed purchases from the smaller one during the quarter, and POWI said its revenue for the quarter would be between $26.5 million and $27.5 million, not the $29.8 million analysts had been expecting. Shares in the company, which had traded as high as 65 in early March, dropped from 49 before the shortfall announcement to 29 9/16 afterward.

With Wall Street's confidence shattered, the stock fell toward 15. And then on April 18, Power Integrations reported first-quarter revenue of $28 million -- above the range it had predicted four weeks earlier -- and earnings of $4.9 million, or 17 cents per share. The stock rebounded to 23 in a day -- about where it was trading midday on Tuesday.

Chief Financial Officer Robert Staples says that because POWI sells so much of its product through distributors, and because it doesn't recognize revenue until the distributor makes a sale, the company often doesn't have a precise picture of final sales until the end of the quarter. But he and CEO Howard Earhart point to positive developments on tap: a new product line later in the year (which should further lower manufacturing costs) and an anticipated reduction in administrative expenses now that the litigation with Motorola is over.

If Power Integrations won any hearts and minds at H&Q, there's scant evidence: Its shares dropped 10% Monday to 25 1/16 on light volume and continued falling Tuesday amid concerns about the cellular-phone supply market at chipmaker

Xicor

(XICO)

.

But its value story stands. Power Integrations is a profitable semiconductor company trading at a slight premium to its growth rate, which says its litigation-related problems are behind it. Makes you think, huh?

The Way It Works

Network Appliance

(NTAP) - Get Report

CEO Dan Warmenhoven noted that an audience member -- clearly a bull on the equipment maker's shares -- wanted to know what the "NR" meant in Chase H&Q's rating on the company's stock.

"I believe that stands for no rating," said Warmenhoven, glancing at Chase H&Q analyst William Lewis, who had introduced the CEO. "He assures me this is going to change, which is why I'm here this afternoon."

Indeed. While small companies are eager to attend big-name investment banking conferences to scare up new investors, established companies such as Network Appliance have little to gain unless the investment bank can generate some action in the public markets. Without research support, Warmenhoven's H&Q appearance was little more than a courtesy call. Watch for the initiation of coverage.

Adam Lashinsky's column appears Tuesdays, Wednesdays and Fridays. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Lashinsky writes a column for Fortune, called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at

alashinsky@thestreet.com.