Silicon Labs looks to make the Internet of Things a reality. Source: Silicon Labs.

One of the most exciting trends in technology recently has been the rise of the Internet of Things, with players in the industry all working toward increasing connectivity across countless platforms to collect and analyze key data to improve efficiency and performance. Silicon Laboratories (NASDAQ:SLAB) has seen the opportunity that the Internet of Things represents, and the maker of integrated circuits has worked hard to position itself as a provider of not only the hardware but also software and systems that can help clients better tap into this budding technology. On Wednesday morning, Silicon Labs released its fourth-quarter financial report, and the growth that it posted eclipsed the expectations of most of those following the stock. Let's take a closer look at how Silicon Labs did in the fourth quarter and what the tech player sees coming next in the industry.

Silicon Labs boasts record results
Silicon Labs delivered strong numbers for the fourth quarter, with revenue climbing almost 11% to $162 million. That represented a new record for the quarter, and it was at the top end of the guidance that Silicon Labs had previously given. Net income actually fell slightly on a GAAP basis, but after adjusting for a substantial rise in stock-based compensation, adjusted earnings of $0.57 per share topped what investors had expected to see by a full dime.

Looking more closely at the results, Silicon Labs saw considerable strength in all of its focus areas. The company delivered record results for the third straight quarter in its Broad-Based Products segment, with particularly strong performance in sales of Silicon Labs' microcontrollers, wireless products, and sensors. Both the Broadcast and Access segments also did better than Silicon Labs had expected.

From a product standpoint, Silicon Labs continued to show its innovative capabilities. The quarter's new products spanned the universe of applications for Silicon Labs, ranging from new radio chips in its EZRadio line and tuner and demodulator solutions for digital and satellite television to a new family of digital temperature sensors.

Source: Silicon Labs.

Silicon Labs didn't hesitate to play up its performance. CEO Tyson Tuttle touted the company's record results, strongly suggesting that Silicon Labs is poised to continue setting new records in the future.

What the future holds for Silicon Labs
Specifically, the acquisition of privately held Bluegiga Technologies announced Tuesday night holds a lot of promise for Silicon Labs. The Finland-based company has specialized in short-range wireless connectivity solutions and software for the Internet of Things, and Silicon Labs sees the buyout as a chance to boost its exposure to the key initiative. In Tuttle's words, "The acquisition of Bluegiga rounds out Silicon Labs' wireless portfolio, significantly expands our wireless connectivity solutions for the IoT, and enables us to address a broader range of market opportunities and customer needs."

Indeed, Silicon Labs' latest guidance shows the quick impact that Bluegiga could have on its results. Guidance for the first quarter would put revenue between $156 million and $162 million, compared to the $154 million that most investors were expecting. On an adjusted basis, earnings per share of $0.42 to $0.48 are in line with consensus forecasts for $0.44 per share.

Wonder Gecko microprocessor. Source: Silicon Labs.

Still, Silicon Labs needs to overcome a long period of share-price stagnation that has frustrated longtime investors. The stock has barely budged since mid-2009, and despite some periods of excitement a year ago, it's unclear what the catalyst for a share-price advance will be. Even with positive guidance, Silicon Labs shares trade at about 20 times 2015 earnings estimates, yet anticipated growth rates are just above 10%, making the value proposition of the shares less than clear.

Between the acquisition of Bluegiga and its results, Silicon Labs gained more than 6% in pre-market trading after it announced its results. In order for that short-term share-price rise to translate to longer-term returns, though, Silicon Labs will have to work harder to maintain and build on its Internet of Things opportunity amid significant competitive pressures.