*Extra* Trying to Figure Out the Tangled Web of Tyco

Tyco talk: Don't be surprised if Tyco International (TYC) comes out in its conference call with analysts tomorrow morning and says that all is well with its accounting. Trading in the company's stock was halted today after a 6% plunge that followed rumors of accounting irregularities at Tyco.

In a statement issued late tonight, Tyco officials said rumors about the company "are false, unfounded and malicious."

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"I heard the reports being circulated about our company," L. Dennis Kozlowski, Tyco's chairman and chief executive officer, said in the statement, "and I can state unequivocally that they are false and baseless. Because we take our commitment to our shareholders and our reputation very seriously, we will pursue this matter until we are satisfied that both have been adequately protected.

"We are confident results for our fourth fiscal quarter, to be reported next week, should exceed consensus earnings estimates," Kozlowski said. "We also are comfortable with the consensus earnings estimate for fiscal year 2000. The strength of our earnings is further enhanced by our focus on the generation of free cash flow. As a testament to the quality of these earnings, our free cash flow expectation for next year represents a very high percentage of our expected net income."

So, what actually happened? Apparently, CNBC reporting ace David Faber mentioned, in passing, concerns raised in a report by David Tice of Dallas' Behind the Numbers and (BEARX)Prudent Bear Fund. (Tice, who has no Tyco positions, short or otherwise, was the original public bear on Sunbeam (SOC). Right, Sunbeam -- I can still remember its denial that it had a problem and that it was going to be making gobs of money.)

Never mind that Tice's report first came out Monday. The mere mention of accounting irregularities in a market as jittery as this -- especially involving an active acquirer like Tyco, which has benefited from the controversial "pooling" accounting method -- is enough to spook investors who are looking for a reason to sell (or who don't really know what they own!).

Then there's the timing of the report: It comes just as Tyco's fiscal fourth-quarter results are being shipped off to its auditors for review, as is customary.

Tice, who was early in nailing the way he believed Sunbeam had been dipping into restructuring charges to help earnings, has similar concerns for Tyco. "The bottom line," he told me late today, "is that Tyco has $2.3 billion of earnings after $3.9 billion of charges over the last three and a half years. It's easy to show a nice progression of $2.3 billion in earnings when you have $3.9 billion to play with through the application of more normal operating expenses against reserves. It's all subject to great discretion."

Will Tice be right? Way too soon to say. Either way, if he is right, investors will have wished they had paid attention to what a week ago looked like a routine Reuters report on insider selling at Tyco. According to the report, Mark Belnick, Tyco's chief corporate counsel, filed with the SEC to sell about $7.5 million in stock through an exercise of options and from an employee benefit plan.

"The counsel has been in his current position since September 1998 and before joining Tyco he was a senior partner at the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison since 1987," Reuters wrote.

The only thing worse than the CFO selling is when the chief lawyer bails.

Tyco officials didn't return calls for comment.

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