Keeping an Eye on Tyco, and New Auditors at SCM

Also, more on (ugh!) Planet Hollywood and Metromedia Fiber Network. And don't forget to visit our message board.
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Thursday Thud

Tyco on tap:

If you missed last night's late dispatch on

Tyco International

(TYC)

,

check it out now.

Tyco: Join the discussion on

TSC

Message Boards.

Auditing angst:

OK, class, when is it time to worry? When a company changes auditors, that's when. Sure, it doesn't

always

mean there's a problem, but it's certainly a red flag, especially at a fast-growing company.

Which brings us to

SCM Microsystems

(SCMM)

, which in a press release just two weeks ago trumpeted how it was named "one of Silicon Valley's fastest-growing technology companies." What it didn't issue a press release on was that it parted ways with its auditing firm,

KPMG

, which it replaced with

Deloitte & Touche

. It left that to its letter-of-the-law 8-K filing, which was filed yesterday with the

Securities and Exchange Commission

.

According to that filing, KPMG "resigned." There were no further details. As is often the case in these filings, this one looked fairly routine. KPMG said the two sides had had no disagreements on auditing matters and that it hadn't issued any adverse opinions against the company.

Indeed, it may be an innocent change. However, FYI, earlier this year SCM was the target of a lengthy report by Howard Schilit's

Center for Financial Research and Analysis

which cited, among other things, charges of aggressive revenue recognition.

SCM officials couldn't be reached last night, when I stumbled on this. If they return my call today, I'll promptly present their side of the story.

Play it again, Robert:

"Will it sound cruel," writes California money manager Eric Von der Porton, "if I note that the best thing about the

Planet Hollywood

(PLHYA)

bankruptcy is that they are planning to list the

new common shares? That way we'll still have the company (and Robert Earl) to kick around for a while!"

And you wonder why Eric gets quoted here so much?

Actually, under the plan, existing Planet Hollywood shares will be canceled. But existing holders will get a few warrants to purchase shares of the new common. Most of the new stock will go to Earl and the other investors, including Saudi Arabia's Prince Alwaleed Bin Talal, who are putting up $30 million of new cash. The existing bondholders will get new stock equal to an ownership position of about 27%.

The company intends to list the new stock presumably to accommodate the bondholders who will want a market for their interests. It may create another situation, though, where public shareholders think the stock is trading up, but it's the new stock, not the worthless stuff they hold. It could get interesting.

And finally:

Still waiting to hear back from

Metromedia Fiber Network

(MFNX)

on how it will recognize revenue from its $550 million

Bell Atlantic

(BEL)

deal -- whether it will be amortized over 20 years or, say, five years. A big difference from an investment standpoint.

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.