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Silicom, Ltd. (SILC)

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Silicom Ltd. (SILC) engages in the design, manufacture, marketing, and support of connectivity solutions for a range of servers and server-based systems. The firm has several growth engines including Information Technology's return to growth, the march to 10GB per second technology, a large and growing base of OEM customers includes most of the market-leading players, staged launch of new products, and a strong OEM business model which limits operating expenses.

SETAC, the firm's new Server to Appliance Converter, which combines the best of standard servers with hardware appliances, should allow the firm to push its revenues to the 100 million run rate level in coming years. We see value in the shares of Silicom.

We believe Silicom should be valued by its cash plus business operations. With the cash and liquid assets of $6.79 per share plus the company's business operations value based on 14.8x our 2011 estimate gives us a $25.00 company value.

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