It was only a few weeks ago chip maker Cirrus Logic (NASDAQ:CRUS) announced fiscal Q2 2013 earnings that were absolutely off the charts. Revenue, earnings, you name it -- they all made a mockery of Cirrus' year-ago period and beat expectations handily. So, what happened? Cirrus was sold off, to the tune of a 12% drop, before intraday trading was actually halted because of the activity.

If you're a value investor, hopefully you caught the article shortly after the Cirrus post-earnings trading craziness and got on board. If you missed it, don't feel bad -- turns out it took Cirrus CEO Jason Rhode and the rest of the management team a couple of weeks, too.

Cirrus buys... Cirrus
Not all share buybacks are viewed as positive. Too often, a company uses a share buyback announcement to change market sentiment, not because of a genuine belief its stock is undervalued. But most corporate finance types believe just the opposite: Stock buybacks are a reflection that company management -- those who know the company best -- recognize the stock is a bargain.

With that said, Cirrus Logic's Nov. 20 announcement of its intention to buy back $200 million shares is an example of the latter, more traditional view. What's most impressive about Cirrus Logic's buyback initiative is it intends to fund the purchases via "working capital and anticipated cash from operations." That's confidence, from those in the know.

The impact
There are two immediate impacts from Cirrus' buyback announcement : No. 1, investors took it as the bullish sign it is, and Cirrus shares are up over 2% from the Nov. 20 closing price. No. 2, analysts have already upgraded Cirrus stock, adding fuel to the already bullish fire.

Now what?
The concerns cited for Cirrus Logic's precipitous decline were the lack of revenue diversity and margin worries. The majority of Cirrus Logic's revenue is derived from the chips sold in Apple's (NASDAQ:AAPL) iPads, iPhones and the like. In other words, a problem at Apple is a revenue problem for Cirrus. With the recent iPhone 5 rocket-like launch, not to mention the iPad Mini, it's difficult to imagine Cirrus having anything but a stellar fiscal Q3 2013.

As for margins, gross margin for fiscal Q2 was 52%, just as it was in the year-ago period. Considering research and development spending increased 50% compared to the year-ago quarter, that flat gross margin is pretty darn impressive.

Improving on Cirrus Logic's 91% increase in Q2 revenues compared to last year, and once again generating per share earnings that are three times the year-ago quarter results, won't be an easy task. But Cirrus is trading under eight times forward earnings, half that of competitor Texas Instruments (NASDAQ:TXN), and its margins are at the top of the industry, again beating Texas Instruments almost across the board.

Cirrus Logic management knows a bargain when it sees it, particularly its own stock. If you like the growth potential of Apple, but can't, or won't, spend $560 or $600 a share, Cirrus is another way to enjoy the iFun.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.