MicronPC.com's

(MUEI)

stock doesn't have a lot going for it right now. But don't let that fool you.

Trading at around 10, it's on the cheap side.

Yahoo!

Finance chatters have been hoping for a buyout, but when

Compaq

(CPQ)

bought most of the distribution assets of

Inacom

(ICO)

for $370 million last month, that talk subsided.

MicronPC, however, believes it has an ace up its sleeve -- or at least a jack. Over the last few months, this little-followed PC direct seller has been trying to persuade the Street it's a Web-hosting company.

MicronPC is telling essentially the same story as the rest of the PC industry these days: As the PC turns into a commodity, companies are looking to everything from business services to consulting to bolster profit margins sapped by declining PC prices. MicronPC's story, however, is intriguing because the company is really headed into a brave new world, applying many of its resources -- as well as the majority of its presentation at the

Goldman Sachs Technology Investment Symposium

-- to its future as a Web-hosting outfit.

Remember the Alamo

"PC companies need to Webify or die," MicronPC CEO Joel Kocher told a single-digit audience Friday.

CFO Jim Schwartz and Kocher -- considered a master marketer by the Street because he helped develop

Dell's

(DELL) - Get Report

direct-model message in the early and mid-1990s -- were on hand to discuss this rather bold move. Kocher left Texas in January 1998 to head up to MicronPC's headquarters in Nampa, Idaho.

The problem investors face with MicronPC is that it has a long way to go to convince the Street it's a Web-hosting player: The company recorded just $4 million in Web hosting-related revenue in its first quarter ended in November.

"I'm intrigued by MicronPC, but I'm not sure if it has proven its case that it's really a Web-hosting company," says David Harrington, a portfolio manager with

Friess Associates

who doesn't have a position in the stock. "But it's awfully cheap." The company trades at 30 times this year's earnings.

Undeterred by the size of the crowd, Kocher said MicronPC is already the No. 3 Web-hosting company, behind

Verio

(VRIO)

and

Exodus

(EXDS)

.

Kocher noted MicronPC has 40,000 Web-hosting accounts and expects to have 100,000 by the end of its fiscal year. Verio has 300,000 Web-hosting accounts. Kocher's argument is that MicronPC hopes to bring in $65 million this year in Web-hosting revenue vs. Verio's $400 million and Exodus' $455 million. "But we are trading at a $800 million market cap, while Exodus has a $21 billion cap."

Dose of Skepticism

The never-shy Kocher said the PC business "in and of itself will not be an attractive place to be in and MicronPC is moving faster than our competitors."

Rick Schutte, Goldman's PC hardware analyst, doesn't quite buy MicronPC's story yet. He told clients after MicronPC reported first-quarter results that "we remain a bit skeptical ... and it seems a bit early to suggest that MicronPC is a leader in this emerging segment. But some investors may look at it as a less expensive method to participate in the Web-hosting market." Schutte has a market outperform rating on MicronPC and his firm has done no recent company underwriting.

But MicronPC may still be in play in a consolidating PC industry, so Schutte stayed close by MicronPC's leader. After all, a large PC company may want a Web-hosting division someday. Web hosting, for now, is the company's best message and the reason MicronPC could become a real story again. The question is when. "This isn't the kind of stock you would want to rush into right now," says Harrington. "It still has a lot to prove."

Q&A?

Initially, I thought the questions put to CEOs were so simple because the harder questions were being saved for each company's breakout session afterwards. But the breakouts were the same. "I have never seen such a tame crowd of buy-siders," says one hedge fund manager who went to a number of breakouts and requested anonymity. "The questions were so dumb that I thought companies may have planted people in the audience to ask them."

The theory here is that many money managers don't really understand what some of these hyperinflated I-stocks -- from

Ariba

(ARBA)

to

Kana

(KANA)

-- do, so they haven't figured out what to ask. Or what part of the balance sheet to study.

So maybe that's why this latest wave of Internet-related stocks has seemingly defied the laws of gravity. Thus far.