I may have been a tad quick on the trigger finger when I wrote Silicon Image (Nasdaq: SIMG) off as irrelevant to the future of digital media technologies. Once again, the company's quarterly results have absolutely crushed expectations -- and management sees only bigger and better things ahead.

Third-quarter sales of $60.5 million was 20% stronger than analyst expectations, and it still beat the Street if you back out the $7.5 million of positive impact from catch-up payments of renewed technology license agreements. $0.18 of non-GAAP earnings per share was more than three times what the average analyst had expected. The stock is racing to two-year highs on the report, including a 36% overnight boost. Yeah, you heard me right: 36% in one day. I guess nobody expected much out of Silicon Image -- I'm not the only skeptic.

As long as electronics manufacturers continue to build systems around technologies that Silicon Images owns important IP on, Silicon Image will make its investors very happy. And I guess we shouldn't expect Hollywood and Madison Avenue to allow them to do anything else, so Silicon Image is safe until further notice.

It's a heck of a racket, actually. Not only does Silicon Image profit nicely from selling its own chips, but also takes a cut of the revenue whenever large companies like Texas Instruments (NYSE: TXN), Analog Devices (NYSE: ADI) create HDMI transmitters and controllers for consumer electronics. I dare you to find a TV, a Blu-ray player, or some other set-top box in your favorite electronics store that doesn't feature this technology today -- and Silicon Image is also looking to extend its reach into mobile devices with the new MHL standard.

Like it or not, Silicon Image is doing all right. I'm adding this stock to my CAPS portfolio as a probable market-beater over the next five years. You could do worse than follow in my size 13 footsteps, given that my CAPS performance outranks 97% of all players.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. The Fool owns shares of Texas Instruments. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.