SIMGE -
"Dow Jones Business News
Silicon Image's Shares Surge on New High-Tech Product
Friday January 9, 1:49 pm ET
By Jen Ryan
NEW YORK -- Shares of electronics company Silicon Image Inc. (NasdaqNM:SIMGE - News) reached a 52-week high Friday after SoundView Technology Group (News - Websites) said strong adoption of the company's high-definition multimedia interface, or HDMI, technology is faring well for the company.
The HDMI interface, which provides consumers with high-definition audio and video content, was featured in more than 70 products at the Consumer Electronics Show in Las Vegas on Thursday, suggesting its strong adoption in the marketplace, analyst Tristan Gerra wrote in a research note Friday.
Additionally, Mr. Gerra wrote that the "meaningful lack of competition for HDMI should position the company well for the next 12 to 18 months."
By midyear, Silicon will have negotiated product design wins for 2005, Mr. Gerra wrote, and "we do not see anybody with comparable technology by that time frame."
Therefore, 2004-2005 should play well in terms of HDMI acting as a major revenue driver for the company, he added.
The analyst was unavailable to provide additional HDMI sales outlook.
Mr. Gerra added that another push for the technology comes from a recent Federal Communications Commission (News - Websites) mandate, which requires video input for digital TVs to be encrypted, or protected from use by unauthorized parties.
According to Mr. Gerra, HDMI is the only technology that is able to satisfy that mandate without having to reduce the power or frequency of signals.
At about 1:25 p.m. EST, shares of Silicon Image were up $1.67, or 20%, at $ 10.03. Earlier, the stock hit a 52-week high of $10.56.
Mr. Gerra, who has an "outperform" rating on the stock, also believes that new HDMI products in Silicon's pipeline should position the company well for design wins in 2005.
Silicon's second-generation HDMI products, announced Thursday, work compatibly with other HDMI technology and offer greater application-specific functionality to consumers -- features which Mr. Gerra believes "represent a significant barrier of entry for competitors attempting to position themselves against Silicon Image later this year."
Despite his optimism over the emerging technology, Mr. Gerra said consumer awareness of the technology is struggling.
"While HDMI is finding strong adoption among suppliers of digital-video solutions in the consumer market place, we believe very few consumers today know the benefits HDMI can bring to their home-video system."
However, Mr. Gerra said that MonsterCable, a leading provider of high-quality audio and video cables for the consumer market, is expected to feature HDMI technology in its products at various major retail outlets, which will likely boost consumer awareness.
A company spokesman was unavailable for comments.
Mr. Gerra was unavailable to disclose whether he owns shares of Silicon Image. SoundView makes a market in the securities of Silicon Image."
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