Standard Microsystems (Nasdaq: SMSC) just reported blowout earnings. The 23% year-over-year sales growth landed the chip designer at a record $107 million of revenue, comfortably ahead of the $105.6 million consensus estimate. Likewise, $0.52 of non-generally accepted accounting principles earnings per share beat the $0.42 per-share target to a pulp. Every segment reported healthy gains, a recently closed acquisition improved Standard's portfolio of USB solutions, and management shared a rosy view of the future.

So why is the stock 10% cheaper after this fine report?

Oh right, I almost forgot: Standard also announced another acquisition. I think it's fair to say that the market hates it.

While last quarter's catch was a member of the relatively healthy USB market, the target this time is Conexant Systems (Nasdaq: CNXT). Conexant's claim to fame is in a portfolio of audio controllers (yeah, not too shabby) and -- fax modems. What is this, 1997?

Standard will pay about $2.25 per Conexant share while also shouldering the company's $100 million of net debt. Me, I think it's a waste of 280 million perfectly good dollars. Standard could have spent less than $280 million on AuthenTec (Nasdaq: AUTH), thus building its core competencies instead of branching out to musty old pastures. Or spend just a little bit more and pick up Mindspeed Technologies (Nasdaq: MSPD) while it's cheap. Networking is still hot, you know.

So Standard Microsystems is trying its hand at growth by acquisition, but I think it picked a terrible target this time. See how this sordid saga plays out by adding Standard to your Foolish watchlist.