Shares of digital media technologist Silicon Image (Nasdaq: SIMG) jumped as much as 21% this morning before retreating just a touch. That's what I call painting a pretty picture.
A surprisingly strong fourth-quarter report explains the market action. Revenue and earnings exceeded analyst estimates by 11% and 133%, respectively, and first-quarter sales are expected to continue to barrel ahead comfortably above Street expectations.
At the heart of Silicon Image's business is its efforts to "drive standards that enhance the connected HD user experience for all consumer electronics," in the words of CEO Camillo Martino. "All consumer electronics" is a mighty big field, but it's not an unrealistic goal for the chief benefactor of HDMI high-def video adoption.
You'd be hard-pressed to find a DVD or Blu-ray player without an HDMI port these days with a matching set of HDMI jacks in your high-def plasma or LCD TV set. If that weren't enough, HDMI connectors have started to appear on smartphones like the Motorola (NYSE: MMI) Droid X and Sprint-Nextel (NYSE: S) flagship HTC EVO 4G. And if you think the wireless HD features included in some of these phones would be a threat, think again: Silicon Image stands behind that standard as well.
Apple (Nasdaq: AAPL) doesn't include HDMI ports on its current top-of-the-line iPhone 4 or iPad devices, but I'd be shocked if iPad 2 and iPhone 5 shipped without them. Such is the game-changing power of Silicon Image's favorite technology.
This stock has now quadrupled over the past 12 months and Silicon Image skeptics who sold their shares after the CES show should be kicking themselves today. Add Silicon Image to your Foolish watchlist or slap an "outperform" rating on the stock in CAPS. You'd be in good company, including your humble All-Star reporter and 95% of all CAPS investors with an opinion on the stock.
