How dare you, Silicon Labs (NASDAQ:SLAB)? How dare you post numbers a little bit ahead of published estimates and then give guidance that was, at worst, in line with that guidance? Didn't you realize you're a bit of a tech darling now, and tech darlings are brutalized if they don't surpass high-end estimates by healthy margins?

Such is life on the lunatic fringe of Wall Street. So, what did Silicon Labs have to say for itself? Revenue was up 9% on an annual comparison and up 4% sequentially. If you subscribe to non-GAAP accounting, operating earnings were up 9% and net income was up nearly 17%. I would have liked to see margin improvement, but I suppose you can't have everything.

Both the mixed-signal and handset businesses grew sequentially, the former by 5% and the latter by 3%. Companies including Motorola (NYSE:MOT) were singled out as good customers this quarter, and the FM tuner business seems to be ramping up nicely.

Honestly, I'd don't see a lot in this quarter to justify all the angst in the stock, other than that hot stocks often react poorly to even the merest hint of disappointment. Maybe folks wanted stronger forward guidance, or maybe they were hoping for better operating margins (the company is still a ways short of its 25% pro forma target). I dunno .

What I do know is that Silicon Labs has given me a nice lesson in how to deal with hot stocks. See, I owned this stock up until about two months ago, and I took a nice profit out of it. Why did I sell? Because I thought the stock was more than just slightly overvalued, even by some optimistic projections.

But here's the thing -- even with today's losses, I'm wishing I had kept some. It's hard enough to find good stories out there, and selling them too soon (even for a good non-fundamental reason) can be painful. Instead, I offer the following: Perhaps the right thing to do would have been to sell half and protect the rest with some staggered stop-loss orders. That way, I would have still had some fun to the upside.

Since I thought it was overvalued enough to sell just a few months ago, I'm obviously not going to say that it looks cheap today. And I'm also not going to pretend that the stock didn't have a good run-up, despite my opinion of its value. I think this is a promising chip company, though, and I'd be on the lookout for the chance to add these shares to my portfolio once again -- if I thought I was getting an opportunistic price.

For more Foolish takes on the chip sector:

Silicon Labs is a Motley Fool Stock Advisor recommendation.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).