(FORTUNE Magazine) – The stench--at least In Wall Street's opinion--from the fast-decaying personal computer industry is so pungent it calls to mind the old Monty Python skit about the pathetically moribund parrot and the hopelessly optimistic pet-shop owner: "It's not dead," he says. "It's merely resting."

Investors accustomed to entrusting a large chunk of their portfolio to companies in the PC industry can be forgiven for not chuckling. After all, not a day goes by of late without another suggestion that the desktop computer is yesterday's news. Analysts lower earnings forecasts on PC makers. Manufacturers and computer-chip companies then miss even those depressed figures. Fund managers make nasty comments. Industry executives sound beleaguered and defensive.

Wait a second. Could the fortunes of the PC--that device that sits on the desk of nearly every professional person in the land and in the dens of half the country's homes--really be that bad?

Well, yes and no. Yes, to the extent that PCs may never again provide the astronomical returns investors came to expect throughout the latter part of the 1990s. But if the question is whether PC makers still have the ability to be profitable, investment-worthy businesses, then the answer is: There's a lot of life left in this bird.

"As someone who has forecast the PC being dead a couple times, I would caution not to rush into it," says Paul Saffo, director of the Institute for the Future, a Menlo Park, Calif., firm that forecasts technology trends. Saffo predicted the industry's demise nearly a decade ago in a 1991 New York Times op-ed article titled FAREWELL, PC--WHAT NEXT? Back then he wrote that within a few years PCs "will still be around but relegated to an obscurity similar to that reserved for typewriters."

He now thinks the PC has some--though not an infinite--number of years left in it. "This is basically the Precambrian period of information appliances, and PCs were the trilobites, basically large marine cockroaches," says Saffo. "The PC certainly is obsolete, but it's not clear what replaces it and when." He predicts, for example, that keyboards will become a thing of the past--but not until an entire generation grows up using voice-recognition technology rather than keyboards. That time clearly isn't imminent.

What's far more likely, say a variety of computer industry watchers and relative optimists, is that no matter which of the myriad handheld and wireless devices--Palm, Visor, and Sony handhelds, Research in Motion's BlackBerry two-way pagers, numerous Web-enabled cell phones--win the battle for supremacy, they will continue to use the 300-million-plus installed base of personal computers as their center point.

"The PC is the fundamental engine for any kind of brainwork," says Martin Reynolds, a researcher for Gartner Dataquest in San Jose. "It connects you into a tremendously valuable network of which we've only begun to scratch the surface." If you want to transfer data, for example, from your personal digital assistant or digital camera to a network, it's very likely you'll connect at some point through a PC or PC-like device. What's more, in their offices--where most white-collar working stiffs still spend half their day--people are likely to continue using their PCs. As Reynolds notes, "An analog for this exists today: When you're at your desk, do you use your cell phone? No. You use your desk phone."

"You're going to need a central depository for all this information," adds Daniel Niles, the prescient PC and chip analyst for Lehman Brothers in San Francisco, who has accurately called some of the industry's cyclical movements. That means that the personal computer, especially for consumers, will become something of a "server for the home."

There's no doubt that things have slowed for now, and that's why all these stocks have been hammered. Gartner Dataquest estimates that PC shipments in the U.S. will increase just 10.5% in 2000, to 49.6 million computers, down from 22% growth in 1997. But the research firm also sees that growth rate picking up by 15% next year, largely because that's when it expects corporate America to start buying Microsoft's latest operating system, Windows 2000, in large volume.

PC companies know what they're trying to avoid: the fate of automobile manufacturers. Even if they're profitable, integral, and a longtime fixture of investors' portfolios, automakers feel like stock lepers. Despite increasing revenues (at least until the recent economic softening and the fiasco over tires) garnered by offering newer and more expensive products like sport-utility vehicles, the auto industry can't overcome its limited growth prospects. Slow-moving PC makers could find themselves in that category: profitable, solid companies whose stock prices stagnate along with their growth potential. Sure, they'd enjoy the occasional SUV-like elixir--for example, high-resolution screens with magazinelike quality, which Gartner Dataquest's Reynolds thinks will become a must-have product--but for the most part they'd be stuck in that slow march to dividend stock.

The real test over the next few years is how well personal computer companies can adapt to the post-PC world--or at least to the post-PC-only world. For example, in Niles' view, Compaq's line of iPAQ handheld and single-purpose Internet-access computers and Gateway's similar TouchPad line launched with America Online have given the companies entree into promising new product lines.

Companies that metamorphose in this way seem primed for real growth. Gateway, for example, has been crowing about how little it is depending on the PC, formerly its only product. Some 23% of Gateway's revenues in the third quarter were non-PC-related, including items such as Internet access. Gateway says that in the not-so-distant future it may derive all its profits from "beyond the box," with PC sales effectively serving as a loss leader.

Other companies, Dell in particular, shouldn't be counted out. The company has a history of attacking entrenched competitors, and, as it goes after EMC and Sun Microsystems in data-storage devices and servers, Dell will exploit its manufacturing prowess and make money for patient investors.

No matter what form it takes, the PC will be part of the future of computing for at least another generation of technology products. True, the PC companies could go the way of the automobile, but the very fear of that fate may save them from it. All of which suggests that, unlike Monty Python's parrot, these stocks may fly again.

ADAM LASHINSKY is the Silicon Valley columnist for TheStreet.com. E-mail: alashinsky@thestreet.com.