Silicon Image Continues Revenue and Earnings Growth in the Third Quarter

SUNNYVALE, Calif., Oct 26, 2010 -- Silicon Image, Inc. (NASDAQ:SIMG), a leader in advanced, interoperable HD connectivity solutions for consumer electronics, today reported financial results for its third quarter ended September 30, 2010.

Revenue for the third quarter of 2010 was $60.5 million, compared to $44.6 million for the second quarter of 2010 and $37.2 million for the third quarter of 2009. Revenue for the third quarter of 2010 includes the benefit of a $7.5 million royalty revenue catch-up. Excluding the royalty revenue catch-up, our revenue for the quarter would have been $53.0 million.

GAAP net income for the third quarter of 2010 was $9.5 million, or $0.12 per diluted share, compared to net income of $1.8 million, or $0.02 per diluted share, for the second quarter of 2010 and net loss of $15.5 million, or $0.21 per diluted share, for the third quarter of 2009.

Non-GAAP net income for the third quarter of 2010 was $13.7 million, or $0.18 per diluted share, compared to non-GAAP net income of $2.0 million, or $0.03 per diluted share, for the second quarter of 2010 and non-GAAP net loss of $3.4 million, or $0.04 per diluted share, for the third quarter of 2009. Non-GAAP net income (loss) for these periods exclude stock-based compensation expense, amortization of intangible assets, restructuring charges, certain professional fees, and net tax adjustments. A reconciliation of GAAP and non-GAAP items is provided in a table following the Condensed Consolidated Statements of Operations.

"Silicon Image experienced another positive quarter," said Camillo Martino, chief executive officer of Silicon Image, Inc. "Our standards-plus product strategy continues to drive sales in our core DTV and Home Theater segments, in particular our revenue in Japan grew 38% quarter over quarter. We continue to make progress with the MHL standard as demonstrated by the recent announcement of our first MHL-enabled products. We are currently sampling products with customers and are on track to achieve our design-win goals for 2011."

The following are Silicon Image's financial performance estimates for the fourth quarter of 2010:

• Revenue: $46 million - $48 million
• Gross margin: 55% - 56%
• GAAP operating expenses: approximately $26 million
• Non-GAAP operating expenses: approximately $24 million
• Interest income: approximately $0.5 million
• Diluted shares outstanding: approximately 78.5 million
• Non-GAAP tax rate: approximately 2% of revenue

Use of Non-GAAP Financial Information

Silicon Image presents and discusses gross margin, operating expenses, net income (loss) and basic and diluted net income (loss) per share in accordance with Generally Accepted Accounting Principles (GAAP), and on a non-GAAP basis for informational purposes only. Silicon Image believes that non-GAAP reporting, giving effect to the adjustments shown in the attached reconciliation, provides meaningful information and therefore uses non-GAAP reporting to supplement its GAAP reporting and internally in evaluating operations, managing and monitoring performance, and determining bonus compensation. Further, Silicon Image uses non-GAAP information as certain non-cash charges such as amortization of intangibles, stock based compensation and goodwill impairment do not reflect the cash operating results of the business. Silicon Image has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of its operating results and to illustrate the results of operations giving effect to such non-GAAP adjustments. The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Conference Call

Silicon Image will host an investor conference call today to discuss its third quarter 2010 results at 2:00 p.m. Pacific Daylight Time and will webcast the event. To access the conference call, dial 800-741-8620 or 212-231-2901. The webcast will be accessible on Silicon Image's investor relations website at http://ir.SiliconImage.com. A replay of the conference call will be available within two hours of the conclusion of the conference call through Sunday, October 31, 2010. To access the replay, please dial 800-633-8625 or 402-977-9141 and enter pass code 21483865.

Financial Tables

To read financial tables, click here

About Silicon Image, Inc.

Silicon Image is a leading provider of advanced, interoperable connectivity solutions that enable the reliable distribution and presentation of high-definition (HD) content for consumer electronics, mobile, and PC markets. The company delivers its technology via semiconductor and intellectual property (IP) products that are compliant with global industry standards and also feature industry leading Silicon Image innovations such as InstaPort(TM). Silicon Image's products are deployed by the world's leading electronics manufacturers in devices such as desktop and notebook PCs, DTVs, Blu-Ray Disc(TM) players, audio-video receivers, as well as mobile phones, tablets and digital cameras. Silicon Image has driven the creation of the highly successful HDMI(R) and DVI(TM) industry standards, as well as the latest standards for mobile devices - SPMT(TM) (Serial Port Memory Technology) and MHL(TM) (Mobile High-Definition Link). Via its wholly-owned subsidiary, Simplay Labs, Silicon Image offers manufacturers comprehensive standards interoperability and compliance testing services. For more information, visit us at http://www.SiliconImage.com/.