A surge in demand for navigation devices set a highly profitable course for Silicon Labs ( SLAB) in the fourth quarter.

The Austin, Texas, chipmaker posted an adjusted profit of $26.3 million or 46 cents a share. That compares with a 24 cent pro forma profit in the year-ago quarter and it beats analysts' expectations for 38 cents in earnings, according to Yahoo! Finance.

Sales for the quarter ended last month were $100 million, up from $74.6 million a year ago, and ahead of the $95 million analysts were looking for.

For the full year of 2007, Silicon Labs booked adjusted earnings of $1.30 a share on $337.4 million in revenue. Those numbers compare with a pro forma profit of 84 cents a share on revenue, adjusted for the sale of its AeroFone unit of $288.1 million in sales in 2006. Analysts expected full-year earnings of $1.24 a share on $332.6 million.

"We were able to reduce operating expenses, accelerate revenue and improve the gross margin profile, more than doubling operating income and earnings per share," CFO Bill Bock said in a press release.

Silicon Lab shares rose $3.53, or 12%, to $32 in premarket trading Wednesday.

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