Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Silicon Image (Nasdaq: SIMG) dropped 10% in intraday trading today after an analyst downgraded the stock.

So what: Needham downgraded its rating on Silicon Image from buy to hold. The report cited valuation as the reason for the downgrade.

Now what: Silicon Image popped in early March on unconfirmed "news" that the company had a product that was designed into Apple's (Nasdaq: AAPL) new iPad 2. An iPad design win could provide a meaningful boost to this small cap's earnings, but those rumors have not been confirmed. That makes it tough to justify a run-up in the stock that took the P/E ratio over 42 times.

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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.