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: Shares of Silicon Image (UNKNOWN:SIMG.DL) started the day with a near-12% pop, but have settled into a 6% gain in the early afternoon as investors digest the company's second-quarter earnings report.

So what: Silicon Image managed to best both top- and bottom-line expectations, reporting $73.7 million in revenue (a 16% year-over-year increase) and earnings of $0.08 per share. Wall Street had projected $71.9 million in revenue and $0.07 in EPS, so the double beat was much welcomed. Silicon Image also announced a $50 million buyback plan, which could reduce shares outstanding by about 11% at current prices.

However, Silicon Image's third-quarter guidance isn't particularly impressive -- the company expects between $78 million and $81 million in revenue, whereas Wall Street was looking for $82.6 million. Based on guidance that anticipates gross margins in the 56% to 57% range, adjusted operating expenses of $35 million, and an adjusted tax rate of 30%, we can expect adjusted EPS to come in at $0.08 to $0.10, which slightly exceeds the EPS consensus of $0.08.

Now what: Silicon Image has been stuck in a rut for a while on a fundamental basis. Today's report is a step toward climbing out of that rut, but the company isn't quite there yet. You might want to dig a little deeper into Silicon Image's prospects before adding this stock to your portfolio.

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