Anything-but-MunDayne

:

Ostrich award

: Years ago I used to hand out Ostrich awards for companies that were trying (or hoping) not to be seen by announcing bad news late on a Friday afternoon. For whatever reason, the practice seemed to slow. Or so I thought, until I was tipped to look at

Pacific Gateway Exchange

(PGEX)

, which late Friday (how does 7:28 p.m. EST sound?) disclosed (as this column previously

suggested) that it has a serious cash problem.

And that's only the half of it.

Turns out the company had gotten a bit too aggressive with its accounting -- at least too aggressive for its auditors. The result: It is restating each quarter from last year, which means audited year-end earnings won't be the same as those reported a mere 31 days earlier. (They'll be 41 cents per share rather than 48 cents.) Reading between the lines: The auditors had problems with the timing of certain expenses, the way some expenses had been capitalized (or spread out over an extended period of time) rather than taken as a direct hit to earnings, and the way costs of a junk-debt offering were expensed.

What's more, according to Pacific Gateway's skimpy 10-K, the company doesn't have the cash to come up with a scheduled credit-line reduction payment -- putting it in default on certain loan agreements. And its lenders have given the company less than two months to scrounge up the required $25 million. If it can't get the money, the company warns that its banks "will have the right to immediately accelerate this indebtedness and foreclose on the assets that we have pledged as security." Such a default, in turn, would result in a "cross default" under another financing arrangement.

The upshot: Pacific Gateway's auditors have warned that the company may not be able to continue as a going concern. "Going concern" letters, while not unusual, aren't routine. The company says it's scrambling (my words, not its) to find financing alternatives.

Lernahooligan alert

: While I was away

Lernout & Hauspie

(LHSP)

said it was

acquiring

Dragon Systems

, the industry leader in speech-recognition software. Created a bit of the whooping-it-up kind of frenzy that occurs with mania-driven stocks. (At least that's what you'd conclude after seeing my email.)

Does this acquisition mean Lernout is out of the

woods?

Hardly, at least not according to Cohodes (as in Marc of

Rocker Partners

, the most vocal short-seller in the stock). He's more fired up than ever about his bearishness on the company, for a number of reasons.

One is that merely joining the No. 1 and No. 2 speech-recognition software companies is no guarantee that the combination will create a great company. (To understand why, go back and read

MSN Money Central

Senior Markets Editor

Jim Jubak's

column,

Picking the Right Gorilla. "Speech-recognition technology is developing so fast," he wrote, "that there's a good chance the winning technology is yet to emerge.")

Next, go look at what Lernout actually acquired. Dragon may be No. 1, but it ain't exactly growing -- at least not when you compare Dragon's sales and earnings from last year, as disclosed by Lernout, with the prior year's financials that were disclosed by Dragon last year when it considered going public. According to that calculation, Dragon's sales actually

fell

17% last year, while earnings swung from a positive $10 million to a loss of $22 million. (There were similarly bleak quarterly comparisons for

Dictaphone

, which L&H agreed to acquire a few weeks earlier.) "If this is a new day," Cohodes asks, "why are they buying a company whose sales are down 17%?"

Good question. I didn't even both to ask 'cause they don't take my calls.

IDT talk

: Looks like

TheStreet Recommends

IDT

(IDTC)

and

Net2Phone

(NTOP)

, no strangers to this

column, come away winners, especially after

AT&T

(T) - Get AT&T Inc. Report

and

Yahoo!

(YHOO)

last week took stakes in Net2Phone (with AT&T

infusing $1.4 billion into Net2Phone, which is majority-owned by IDT).

Doesn't mean concerns raised

here about the convoluted nature of IDT's financial statements weren't appropriate. Just means IDT has a stake in something that other companies think has value. Whether Net2Phone is everything AT&T and Yahoo! think it's cracked up to be doesn't really matter at this point. An investment (from AT&T) of $1.4 billion is an investment of $1.4 billion. Cash is cash.

End of story.

Finally...

: Very strange to be away last week, staying at a Hilton in Del Mar, Calif., that

doesn't

have

CNBC

or any business programming. Didn't take my PC (too heavy for a nonworking trip), so no

TSC

, and I didn't have time to read anything but

USA Today

. (Fine for updates, but I missed real time!) It was like living in a time warp -- though I did catch a peek at

CNBC

from time to time; every shop or restaurant in the area that had a TV had it tuned to you-know-what.

Came back to a financial world seemingly in shambles -- only you wouldn't have known it Friday watching the sun set over the ocean from atop Sbicca (the old Kirby's restaurant in Del Mar). (Kinda helps keep things in perspective.)

P.S.: While I may have been a week or two early, the

Nasdaq

, per my prediction on

Fox

,

did

touch 4,400! (Eat your heart out,

Smith, as in

G.B.!)

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.