Silicon Image Reports First Quarter 2005 Revenues

SUNNYVALE, Calif., April 21 /PRNewswire-FirstCall/ -- Silicon Image, Inc. (NASDAQ: SIMG), a leader in multi-gigabit semiconductor solutions for the secure transmission and storage of rich digital media, today reported financial results for its first quarter ended March 31, 2005.

  Selected Q1 Highlights:

  -- Revenue of $44.3 million for the quarter, an increase of 23.6 percent
     over the year ago quarter and a 3.8 percent sequential decrease from
     the prior quarter
  -- GAAP net income was $16.6 million, or $0.19 per diluted share, and
     compares to a net loss of $7.9 million or $0.11 per diluted share for
     the year ago quarter
  -- Pro-forma* net income was $7.7 million or $0.09 per diluted share, a
     year-to-year improvement of $3.0 million
  -- Product Revenue excluding license revenue for the Storage, PC, and CE
     product lines grew sequentially 11 percent, 1 percent, and minus
     11 percent, respectively.
  -- Added 41 new High-Definition Multimedia Interface(TM) (HDMI(TM))
     licensees; licensees now total approximately 211

Silicon Image achieved revenue of $44.3 million for the first quarter. This was an increase of 23.6 percent from revenue of $35.9 million achieved in the first quarter of 2004, and was down 3.8 percent sequentially from the $46.1 million in revenue recorded for the fourth quarter of 2004.

Net income under Generally Accepted Accounting Principles (GAAP), which includes stock compensation benefit, amortization of intangible assets, patent defense costs and realized loss on an investment security was $16.6 million, or $0.19 per diluted share, for the quarter ended March 31, 2005. This compares to a net loss of $7.9 million, or $0.11 per diluted share, for the year ago quarter, and a net loss of $0.1 million, or $0.00 per diluted share for the fourth quarter of 2004.

First quarter pro-forma* net income was $7.7 million or $0.09 per diluted share, and was calculated excluding a non-cash benefit for stock compensation ($9.3 million, resulting primarily from a decreased average stock price on options granted and re-priced in prior periods), a non-cash expense for the amortization of intangible assets ($0.3 million), and a loss ($0.1 million) on an investment security and patent defense costs. This compares to a pro-forma net income of $10.3 million, or $0.12 per diluted share, for the fourth quarter of 2004, and a pro-forma net income of $4.7 million, or $0.06 per diluted share, for the first quarter of 2004.

Commenting on the results, Steve Tirado, Silicon Image's president and chief executive officer, said, "We executed well in the first quarter and achieved both our top and bottom line goals. While we experienced softness in our licensing revenues, we made up for it by improvements in our product revenue combined with lower operating expenses. We are also extremely pleased by the continued wide-spread adoption of HDMI as evidenced by the 41 new HDMI licensees for the quarter. In general our business outlook remains strong and we look forward to achieving record revenues in the upcoming quarter."

"We had an extremely good quarter in terms of incoming orders. First we signed a number of licensing transactions that will receive revenue recognition in future periods. Second, we achieved record incoming product orders for the quarter and as a result, we are entering the second quarter with approximately 70 percent visibility. We are looking forward to improved operating results as we enter the traditional growth-oriented quarters for our business," added, Silicon Image's chief financial officer, Robert Gargus.

The company will host a conference call at 2:00 p.m. PDT today to discuss its first quarter 2005 results and business outlook. The call will be broadcast over the Internet and can be accessed on the investor relation site located at A replay of the conference call will be available on this site until 12:00 p.m. PDT on May 1, 2005.

  * Pro-forma net income or loss represents net income or net loss,
    exclusive of stock compensation expense (benefit), amortization of
    intangible assets, patent defense costs, restructuring costs, and losses
    on investment securities.

  About Silicon Image

Headquartered in Sunnyvale, Calif., Silicon Image, Inc. designs, develops and markets multi-gigabit semiconductor and system solutions for a variety of communications applications demanding high-bandwidth capability. With its proprietary Multi-layer Serial Link (MSL(TM)) architecture, Silicon Image is well positioned for leadership in multiple mass markets including PCs, consumer electronics, and storage. Silicon Image is a leader in the global PC/display arena with its innovative digital interconnect technology and is now emerging as a leading player in the fields of storage and consumer electronics by offering robust, high-bandwidth semiconductors. For more information on Silicon Image, visit

Safe Harbor Statement

This news release contains forward-looking information within the meaning of federal securities regulations. These forward-looking statements include statements related to future financial results, and business outlook. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. In particular, future demand in PC, display, consumer electronics and storage markets may differ from current expectations, adversely affecting expected future results for the company, new product introductions may not be timely or successful, and standards may not be adopted at the rates anticipated. In addition, see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Factors Affecting Future Results" in the most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed by Silicon Image with the SEC. Silicon Image assumes no obligation to update this forward-looking information.


                                               Three Months Ended
  (In thousands, except per
   share amounts)                      Mar. 31,      Dec. 31,     Mar. 31,
                                        2005          2004          2004
    Product                           $40,808      $41,999       $32,050
    Development, licensing
     and royalties                      3,512        4,073         3,808
       Total revenue                   44,320       46,072        35,858

  Cost and operating expenses:
    Cost of product revenue            16,701       17,314        13,363
    Research and development           12,560       11,173        10,585
    Selling, general and
     administrative                     7,597        7,554                 6,947
        Stock  compensation  expense
          (benefit)                                                (9,327)              10,057                12,068
        Amortization  of  intangible
          assets                                                              274                    274                      357
        Patent  defense  costs                                      49                      35                      165
              Total  cost  and  operating
                expenses                                              27,854              46,407                43,485

    Income  (loss)  from  operations                16,466                (335)              (7,627)
    Interest  income  and  other,  net                    498                    320                        84
    Income  (loss)  before  provision
      for  income  taxes                                        16,964                  (15)              (7,543)

    Provision  for  income  taxes                            331                      65                      317
    Net  income  (loss)                                      $16,633                $(80)            $(7,860)

        Net  income  (loss)  per  share
          -  basic                                                        $0.21            $(0.00)            $  (0.11)
        Net  income  (loss)  per  share
          -  diluted                                                    $0.19            $(0.00)            $  (0.11)

        Weighted  average  shares
          -  basic                                                      78,307              76,774                72,328
        Weighted  average  shares
          -  diluted                                                  87,376              76,774                72,328


                                                                                              Three  Months  Ended
                                                                                Mar.  31,          Dec.  31,      Mar.  31,
    (In  thousands)                                                    2005                  2004              2004

    GAAP  net  income  (loss)                              $16,633                $(80)      $(7,860)

    Pro-forma  adjustments:
    Stock  compensation  expense
      (benefit)  (1)                                              (9,327)              10,057          12,068
    Amortization  of  goodwill  and
      intangible  assets  (2)                                      274                    274                357
    Patent  defense  costs  (3)                                    49                      35                165
    Realized  loss  on
      investment  security  (4)                                  119                      --                  --
    Pro-forma  net  income                                    $7,748            $10,286          $4,730

    Pro-forma  net  income  per  share                  $0.09                $0.12            $0.06
    Weighted  average  shares  *                          87,376              88,101          83,415

    (1)  Non-cash  expenses  associated  with  stock  option  modifications
            (including  repricings)  and  certain  stock  options  issued  to
            employees  in  our  Initial  Public  Offering,  to  employees  of  acquired
            companies,  and  to  non-employees  in  exchange  for  services.
    (2)  Non-cash  expenses  for  the  amortization  of  goodwill  and  intangible
            assets  recorded  in  connection  with  our  acquisitions.
    (3)  Costs  incurred  to  defend  our  intellectual  property  and  to  integrate
            the  operations  of  companies  we  have  acquired.  These
            expenses  have  been  excluded  because  they  are  expected  to  be  incurred
            over  a  limited  period  of  time  and  are  not  directly
            attributable  to  our  ongoing  operations.
    (4)  Realized  loss  on  sale  of  investment  which  was  previously  recorded
            as  an  unrealized  gain  on  derivative  investment  security


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