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With a mostly humdrum earnings season wrapped up, it's instructive to take a look beyond the usual tech large-caps -- by their sheer size, forced to depend on the larger fortunes of the economy -- to the small fry that are managing to squeeze out growth.

After all, the leading tech names couldn't offer much for investors anxious for a pickup in demand. Once again,



leaned on currency gains for growth, while

Taiwan Semi


, the massive foundry, said the chip industry is likely to grow well below Wall Street expectations next year.

But in the small-cap world -- an admittedly volatile one -- company fortunes aren't quite so tied to an uncertain economy, and it's easier to scout out an overlooked but promising name. With that in mind, below are four tech-stock picks with market caps measured in the millions, not billions. By coincidence, three are plays on health care -- a fact that underscores how biotech advances are now catching the eye of investors who once looked to technology hardware for their growth fix.

Paul McEntire, manager for the


Marketocracy Technology Plus fund, says most semiconductor plays have lately looked uninviting, given price pressure and weak PC spending (though there are a few notable chip exceptions, including high-margin

Linear Technologies


, in which he has a holding).

But over the past couple of years, he's found some promising growth stories in health care technology. "We tend to be somewhat more focused on the longer term and I felt like the demographics for companies providing services in health care were pretty encouraging, not only in our own population but as the rest of the world develops," says McEntire.

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Getting Healthy

On the health care side, two of his favorite under-the-radar picks are

Vital Images

( VTAL) and




Vital Images, a medical software play, uses medical scanners to generate three-dimensional images of human innards; it has struck a deal to include its software on medical systems from


. In the latest quarter the company upped its profit to $666,000, up from last year's $201,000, while sales jumped 54% (to a still-diminutive $7.5 million).

On the downside, admits McEntire, "Shares of Vital are a little riskier

than Cepheid because it's run up so far." Vital is certainly not for the weak of heart; in intraday trading, shares have dipped to as low as $4.50 and hit a high of $23.23 over the past year. Year to date the stock is up 116% based on its Wednesday close of $19.40.

Though the stock has shown handsome appreciation in the year and a half since he bought it, McEntire says he's holding on. "It hasn't really achieved the recognition it deserves. We still think they have a long way to go," he says.

Another pick of McEntire's, Cepheid, markets genetic instruments and tests that can quickly suss out the presence of whooping cough, E. Coli or cancer present in lymph nodes. While traditional tests can take days to weeks, Cepheid's products can detect disease in around a half-hour. Its most prominent customer: the U.S. Postal Service, which is testing out Cepheid technology to scout for anthrax spores in the mail.

Sales, while still very small, are on the upswing, rising from $3.2 million a year ago to $4.1 million in the most recent quarter. Meanwhile, the company has managed to narrow its loss to $4.4 million in the June quarter from $5.5 million a year ago.

Though the stock shot up above $8 right after Sept. 11, 2001, shares then subsided and lately have oscillated in the $3-to-$5 range. "Cepheid is still pretty attractively priced," says McEntire.

McEntire isn't the only stock-picker to home in on medical technology stocks. Peter Conley, director of equity research at MDB-Analytiq, an independent firm that supplies research to big mutual funds, says his company is likewise intrigued by the convergence of health care and tech hardware such as semiconductors. The excitement around drug discovery is reminiscent of the early days of PCs, he points out, with the drug-discovery-conference circuit taking off in the same way that Comdex, the massive tech confab, once did.

Taking Measure

Among the catchier recent picks at MDB-Analytiq is

Caliper Technologies

( CALP), which markets "lab on a chip" technology. Its microchips automate and standardize the laboratory processes used for drug discovery; each piece of silicon holds a network of microscopic channels through which chemicals are pushed in order to perform experiments.

"Caliper in simple terms wants to be the



of drug discovery," says Conley, calling the company "arguably the leader in the space."

"Traditional drug-discovery techniques take 12 to 18 months and have about a 50% yield, but using Caliper they take three to four months and end up with a 90% yield," says Conley.

The solid product line isn't the only thing of interest; Conley says the stock got a lot more interesting a few months ago when Caliper decided to opt out of an exclusive commercialization relationship with massive



, the maker of scientific instruments. Now Caliper can sell direct to the market.

To be sure, the company remains stuck in the red; in the June quarter it posted a loss of $9.5 million on revenues of $5.9 million. Though it narrowed its loss, sales actually dropped from last year's $7.2 million level.

But Conley calls "credible" its goal to hit the break-even point by the end of calendar year 2005. "The stock still trades at basically cash, but if you look at the appraisal of its IP

based on the value of patents it could be worth as much as $140 per share," he says.

Betting on the Phone

For those who can stomach risk, he also likes chipmaker

Micro Linear


, a tiny outfit with a market cap of only $37.3 million -- not far above 2002 sales of $28.7 million.

Counting the value of the company's business campus in San Jose, Calif., of around $8 million and cash of $19 million, the company is worth about $3 a share -- just about where it's currently trading, says Conley. "So the market's valuing them at zero."

"There's probably good reason for that on the face of it," he acknowledges. "Micro Linear makes the chipsets that go into cordless phones, and most people think of cordless phones as a $90 commodity product."

Indeed, partly due to price declines on its goods, Micro Linear saw its second-quarter revenue drop 29% from a year ago, while its loss widened to $3.3 million from last year's $1.2 million loss. In May, it was forced to lay off 37 employees out of a staff of 85.

Another concern: In 2002, Micro Linear drew 56% of its sales from one customer, Japanese-based Uniden, which holds a big chunk of the market for cordless phones. And MLIN's competitors include big names such as

National Semi




( IFX),




Texas Instruments



But as Conley sees it, Micro Linear stands to see impressive upside because of the silicon it's developed for the wireless broadband spectrum. Micro Linear has taken "what's otherwise a two-chip design and made only one chip, which reduces the cost by 50%," he says.

"The big market will be the home game market -- Nintendo,



Playstation and



Xbox. They're all hard-wired presently. But they will move to wireless, and they'll do it through this technology."