Integrated-circuit company Silicon Labs' (NASDAQ:SLAB) latest earnings report states that the company enjoyed strong second-quarter performance. Let's take a closer look at how the chips fell.

On average, analysts expected second-quarter revenue of $106.6 million and earnings of $0.27 per share. By that metric, the company had strong results: $107.2 million in sales and earnings of $0.28 per share on a fully diluted share basis.

However, this quarter's results look downright sickly when compared with year-ago numbers. Revenue dropped 15% and net income collapsed 31.6% from last year's second quarter.

While adjusted operating income fell from 27% of sales in the year-ago quarter to 19% this quarter (net of one-time charges), this debt-free company still increased cash and short-term investments by $27 million. At $330 million total, that's a whopping $6 per fully diluted share.

Silicon Labs' revenue guidance for next quarter calls for sales between $100 million and $103 million. That falls below this quarter's sales and the $109.9 million analysts were expecting. The company did not provide earnings guidance, though analysts expect $0.28 per share.

Silicon Labs has two exciting products in the pipeline: the industry's smallest FM broadcast radio tuner, for cell phone handsets and MP3 devices, and a small, high-performance quad-band radio frequency transceiver, also for cell phones. These products capitalize on two of Silicon Labs' strengths -- integration (reducing the number of individual parts to manufacture a device) and miniaturization. Product shipments of the FM tuner are expected to start this quarter, three months earlier than anticipated.

Silicon Labs competes with giants such as Texas Instruments (NYSE:TXN). Although it has been struggling to get its revenue back on a growth curve, it hasn't stopped piling up cash on the balance sheet. The combination of a strong cash position and exciting products bodes well for the future. It might also explain why Motley Fool co-founder Tom Gardner has recommended the stock three times to Motley Fool Stock Advisor readers.

Silicon Labs has grown earnings by 52.5% over the past five years. Though analysts expect that growth rate to slow to 23% over the next five years, it's still more than double the 10.6% expected from the S&P 500.

The company's shares are selling for 20.1 times expected 2006 earnings. For a cash-rich company with Silicon Labs' anticipated growth, that's downright cheap.

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Fool contributor W.D. Crotty does not own shares in any of the companies mentioned.