Silicom Ltd. (Nasdaq: SILC) today reported robust fourth-quarter earnings that beat the sole analyst’s estimate on Wall Street.

For the three months ended Dec. 31, 2007, the Israeli small cap reported net income increased by 71% to $1.8 million, or $0.27 per diluted share, above the $0.25 per share an analyst on Wall Street was forecasting. The current quarter’s net compares with $1.1 million, or $0.20 per diluted share, for the fourth quarter of 2006.

Revenues for the fourth quarter increased by 49% to $7.5 million compared with $5 million for the fourth quarter of 2006. Revenues were virtually in line with the $7.22 million an analyst on Wall Street was forecasting.

The company attributed its strong results to accelerated growth of its target WAN optimization, security and other network appliances markets, which Silicom says continues to exhibit strong demand for its advanced multi-port connectivity and bypass products. Silicom also stated it has been growing faster than its target markets due to increased business with existing customers as well as new design wins. 

 “The company’s bypass card revenue grew 35% sequentially, which we believe was driven by a rebound in ordering from Cisco and Riverbed and continued strength from Blue Coat Systems,” Merriman Curhan Ford analyst David Duley wrote in a research note today.

Silicom recorded a steady rise in operating margin for the quarter. Operating margin increased to 22% compared with 19% for the fourth quarter of 2006.

The company also stipulated that it is not dependent on any single market segment, as the small cap says it has accumulated more than 50 design wins across a variety of market segments.

“We believe Silicom is currently one of the best positioned players in the WAN optimization market due to it being the sole supplier of a critical component to over 80% of the end market,” Duley wrote.

On account of a strong quarter, Duley raised his fiscal year 2008 revenue and EPS estimates to $32.8 million and $1.13 from $32.5 million and $1.10, respectively.

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