What happened

Shares of Cirrus Logic (NASDAQ:CRUS) rose as much as 12.5% on Tuesday morning, following a strong second-quarter earnings report. By 12:10 p.m. EST, the stock had cooled down to a 7.3% gain.

So what

The audio chip expert's second-quarter sales fell 11% year over year to $347 million. Adjusted earnings took a 19% haircut, stopping at $1.26 per diluted share. Wall Street had expected much deeper dips, though. Your average analyst would have settled for earnings near $0.90 per share on revenue in the neighborhood of $311 million.

Furthermore, Cirrus' management set its third-quarter revenue guidance at roughly $460 million. Here, the analyst consensus pointed to approximately $354 million.

A young woman holds up a pair of wireless earbuds to the camera.

Image source: Getty Images.

Now what

Cirrus enjoyed strong component sales into the smartphone and tablet markets, indicating healthy demand for largest customer Apple's recently launched iPhone 12 and MacBook products. CEO Jason Rhode also took some time on the earnings call to highlight strong interest in Cirrus' new wireless headphone solutions, which leads back to Apple again through the AirPods Pro product line.

Rhode also announced that he is stepping down from the CEO position at the end of the year, to be replaced by Cirrus president John Forsyth. Rhode will continue to work closely with Cirrus in order to smooth out the transition. Shareholders did not seem to mind the executive transition, judging by the sharp jump in Cirrus Logic's share prices today. The stock still looks affordable at 18 times trailing earnings, trading 8% lower from a 52-week perspective.

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