WEBMETHODS

WEBM

I am looking at WEBM with some interests. This is not one of my typical picks because (1) it is only nominally making money; (2) It has basically disappointed in the past few quarters; (3) Outlook is not exactly inspirational; (4) NASDAQ has gone up quite a bit from its early April low; (5) Software sector in general is not in favor presently. On the other hand, it is dirt cheap, trading at only 1.7X05Sales, 1.6XCASH. I am generally against buying cheap for the sick of cheap. But the company has some potential for an upside surprise in the next few quarters. Its clean balance sheet and solid cash position will provide some down side protection. Most importantly, its current cash position is approximately $3.0 per share and it has been cash flow positive for the past three quarters. It is ignored by analysts, if not detested. It might worth to take a small position. (Low-balling some, not filled).