The Tuesday thud:

Phantom profits:

Will this

Lernout & Hauspie

(LHSPF)

story never end? The Belgian voice-recognition software maker has been high on the list of favorites among short-sellers for what seems like an eternity, and remains there despite its stock's halving in the past year. The shorts have alleged a variety of sins, including aggressive accounting and a stock that has gotten way ahead of the potential market for its products -- especially when it has just $150 million in revenues and a market value of $1.4 billion.

Late last year the company

disclosed that the

SEC

was scrutinizing its accounting of takeover-related writeoffs. Lernout has already warned that the SEC's findings could force it to slash the amount of those writeoffs, which in turn could force the company to restate prior earnings.

But by how much?

Lernout said it wouldn't release the results of its fourth quarter until the SEC review was complete. On one conference call, analysts were led to believe the numbers would be ready by Jan. 29. Then, apparently based on guidance from the company, they thought it would be closer to the first week of March. Now there's doubt whether the final tally will be in by the end of March, and in an interview late yesterday CEO Gaston Bastiaens wasn't any more specific. "We don't think it will be any more than a few weeks," he said.

While I had Bastiaens on the phone, I asked why he believes the short-sellers will regret the day they ever shorted his company's stock (at least at these levels). "They will be very unhappy when they see Lernout & Hauspie's growth in the business," he said. He then went into a marketing spiel about the future of voice recognition, without mentioning competition in what is becoming an increasingly crowded field. "When you buy into technology you buy it not for the past, but for the future ... what this software will create in future revenues," he added.

True, but that's assuming the company will ever make money selling its software, which some critics believe will ultimately be a utility, much like fonts, that is given away. Besides, if you bought that line when he ran

Quarterdeck

(QDEK:OTC BB), and didn't sell while the stock was soaring, you went bust along with the bubble surrounding that company. It was delisted by

Nasdaq

last year and now trades way below a dollar.

Short Positions

eFax follies:

eFax.com's

(EFAX) - Get Report

stock zoomed 70% yesterday after it announced it would provide its free email service to users of

Xoom.com

(XMCM)

. eFax provides a service that delivers faxes directly to your email. All you do is register and get a phone number. Just one small problem: They apparently can't even meet demand for ex-Xoom. I signed up March 9 and received this email: "Due to the overwhelming demand for the eFax service, we are experiencing some delays in assigning new eFax number. This email is being sent to confirm that your registration information has been recorded in our order database. We will process your order and send you an email with your eFax number and PIN as soon as we are able."

I'm still waiting. (And it sounds great in theory, but a friend who recently got his number after a weeklong wait said it took 90 minutes for the fax to make it from the fax machine in his office to his nearby PC.) Hey, whaddaya expect fer free?

Iomega talks back:

Finally heard from

Iomega

(IOM)

late yesterday regarding yesterday's

item that quoted a short-seller who made several points to explain why he's still short Iomega's once-sizzling stock. Look for a point-by-point response from Iomega right here, in this very space, later today.

From bad to worse:

When we last left

Leasing Solutions

(LSN)

a few months ago, it was lining up an investment banker to help it develop the ole strategic alternatives. The banker was hired, there were no alternatives (at least, not yet), debt-rating services withdrew their ratings, fourth-quarter earnings haven't yet been released and yesterday its longtime president and CEO, Hal Krauter, quit.

What's more, at least one short-seller who was banging at the company when it was trading in the mid-20s told me yesterday he would short more, even at yesterday's closing price of 2 5/8, if he could.

The reason: To make its earnings growth look stronger than it really was, Leasing Solutions assigned a 25% residual, or end-of-lease, value to the PCs it leased. The normal residual for the industry was closer to 12%. The higher the residual, the cheaper the lease, and the more customers you can get. That can (and did) turn into a huge problem when the product being leased is a PC that went out the door at $3,000 and is now returning with a value of around $700. That's way too high, in today's sub-$1,000 world, for a machine that's even just a few years old.

"Unless they can sell them for $700," the short-seller says, "the company is a zero."

Officials from Leasing Solutions couldn't be reached.

Finally, reader revolt from Doug Graham of Los Gatos, Calif., who writes:

"Herb was touting the problems of ADSL in 1996, the slowing PC sales in 1996, equating ADSL competitors to semiconductor manufacturers, etc., etc.

"If he were alive in the 19th century I am sure he would have slammed Mr. Colt and his revolver ... I'll guess 'too expensive.' Reading him is like listening to my Grandpa tell me about how the Internet won't make it. ...

"When I read that Herb was going to

TSC

, I lost a lot of respect for

TSC

. I'll bet he interviews well, but he has absolutely ZERO vision. Otherwise known as 'empty suit.'

"As Chambers says at

Cisco

, the speed of commerce in the world will continue to accelerate and companies' valuations will only get larger in anticipation of that growth. Of course, sometimes the market will be wrong, and those valuations will drop even faster.

"Glad I never listened to Herb. Give him time and you will lose readers. I have read many more

Chronicles

(SF) since his column left the business page."

There you have it,

TSC

readers, don't say you weren't warned!

Herb Greenberg writes daily for TheStreet.com. In keeping with the editorial policy of TSC, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnerships. He welcomes your feedback at herb@thestreet.com. Greenberg writes a monthly column for Fortune and provides daily commentary for CNBC.