When I

last mentioned

Mattel

(MAT) - Get Report

back in November, the story went something like this:

About a month ago Mattel disclosed earnings trouble related to its The Learning Company subsidiary. A few weeks later it said everything was OK. Then, on Wednesday, it announced that the two guys who ran TLC, Michael Perik and Kevin O'Leary, had 'left.' Left! Nothing more, nothing less. What really happened? A company spokesman was mum, but this much is certain: It's generally never a good sign when top execs abruptly leave after bad news with no explanation. Suggests some skeletons popped out of some closet. Or maybe a bunch of unsold software that nobody ever knew existed? Expect this to be just the start of yet another chapter in this saga.

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And that saga unfolded today with Mattel CEO Jill Barad's

departure. The company's performance in its audited quarter was much worse than expected. There was no explanation, other than to blame much of the problem on undisclosed "issues" at The Learning Company, whose sales were 40% below a year ago (40%!?). Mattel also said The Learning Company would take a charge in the range of $75 million to $100 million. Why? It's unclear, but remember what this column said about the possibility of somebody stumbling on a bunch of unsold software that nobody ever knew existed?

That may or not be the ultimate reason for The Learning Company's troubles, but what is clear -- as has been written here before -- is that for years The Learning Company was a disaster waiting to happen. (Numerous emailers to this column, identifying themselves as ex-TLC employees, describe a company in financial turmoil just prior to the Mattel acquisition.)

The company had come under scrutiny here and elsewhere for aggressive accounting in an industry that was coming unglued. TLC made acquisition after acquisition and took charge after charge -- so many, in fact, that it was hard for most financial sleuths to get a good handle on the company's real earning capability.

Enter Mattel, which clearly got more (or less?) than it bargained for.

Moral: If one company acquires another company that smells bad, the acquirer is likely to wind up with a horrible stench.

Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

herb@thestreet.com. Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.