The internet is arguably the most hated sector in the market. The dreams of retail investors have been shattered like a computer screen getting punched through by a bare fist. So many of the internet stocks have been written off that many now trade at significant discounts to cash. Normally when one talks about companies that trade below their cash value, you expect a lot of crippling debt. Or nasty pending lawsuits. Or an 8.0 Richter scale earthquake with the epicenter at their corporate headquarters. But with most of these internet stocks, none of these hold true.

What has happened in this sector has been a wholesale devaluation of anything with businesses based on the internet. Especially those without household names like Yahoo or AOL. When doing an analysis of a situation like this, its always important to focus on why a stock is so cheap. Is their business horrible? Are they burning cash too fast? Does management just not get it? Don't get me wrong, most of these stocks deserve to be trading below cash value. Just how much below cash value is the key question here. I'm looking for situations where the company could go private, liquidate its assets, or become an acquisition target and provide good shareholder value. If it can't do this, it doesn't interest me. Let us take a look at a few of these stocks up close, along with situations where internet stock holders who bought into recent dips paid off.

Eprise Corporation (EPRS) is a software company that provides internet content management solutions with the goal of improving web site effectiveness. The Eprise Participant Server, which is the Company's core product, provides a comprehensive, out-of-the-box Web content management solution that enables an enterprise to distribute Web content management and content approval rights broadly within the organization with minimal involvement by technical personnel. A product that doesn't require much technical labor on the customer side seems to be a realistic solution for many companies. At the end of September, EPRS had $74.9 million in cash, or $3/share in cash. It closed today at $1 19/32. Their cash burn rate over the last 9 months was just $11.4 million. Thus, at this point, EPRS should still have at least $70 million in cash. What's important here is that their losses are projected to decrease to $.18/share from $.51/share in the next fiscal year. So their burn rate will be even slower than its current pace. In the last two weeks, they have announced that they will engage in a stock buyback program and have adopted a stockholders' rights plan to fight against abusive takeovers. At the beginning of this quarter, the stock was hovering at around $8/share. It has taken an 80% haircut in less than 3 months. The stock is very compelling at these levels due mainly to the low cash burn rate, although I don't have extensive knowledge about the stock, it has lots of time to explore options and mergers, which is key.

Lante Corporation (LNTE) is an internet consulting company that focuses exclusively on facilitating online marketplaces. Over the last 9 months, their revenues were at $61.1 million with $7.5 million in losses. Next year, they are projected to cut those losses in half. Although this sounds less realistic in the aftermath of the SCNT and RAZF blowups in the internet consulting sector, they recently announced that their goal of reaching "cash break-even" is during the first half of 2001. This after cutting staff by 19 percent and taking a non-cash charge of $7-$10 million for the quarter. Not only does their $86 million in cash burn less quickly, they actually have a chance of righting the ship and making money. The balance sheet is strong with no debt. The book value is $2.75/share, with $2.15 of that coming from cash. The right steps are being taken, its currently trading at a discount of 1 11/16, which is a 65% reduction from the start of the quarter. At current levels, the stock is very compelling as a buy.