This is because libdir has a trailing slash which breaks the comparision.

RP 2/1/10

Index: binutils-2.20.1/ltmain.sh
===================================================================
--- binutils-2.20.1.orig/ltmain.sh	2009-09-01 00:59:32.000000000 +0800
+++ binutils-2.20.1/ltmain.sh	2010-07-29 09:41:14.000000000 +0800
@@ -2156,8 +2156,12 @@
 	dir="$dir$objdir"
 
 	if test -n "$relink_command"; then
+          # Strip any trailing slash from the destination.
+          func_stripname '' '/' "$libdir"
+          destlibdir=$func_stripname_result
+
 	  # Determine the prefix the user has applied to our future dir.
-	  inst_prefix_dir=`$ECHO "X$destdir" | $Xsed -e "s%$libdir\$%%"`
+	  inst_prefix_dir=`$ECHO "X$destdir" | $Xsed -e "s%$destlibdir\$%%"`
 
 	  # Don't allow the user to place us outside of our expected
 	  # location b/c this prevents finding dependent libraries that
@@ -5570,8 +5574,14 @@
 	    absdir="$abs_ladir"
 	    libdir="$abs_ladir"
 	  else
-	    dir="$libdir"
-	    absdir="$libdir"
+	    # Adding 'libdir' from the .la file to our library search paths
+	    # breaks crosscompilation horribly.  We cheat here and don't add
+	    # it, instead adding the path where we found the .la.  -CL
+	    dir="$abs_ladir"
+	    absdir="$abs_ladir"
+	    libdir="$abs_ladir"
+	    #dir="$libdir"
+	    #absdir="$libdir"
 	  fi
 	  test "X$hardcode_automatic" = Xyes && avoidtemprpath=yes
 	else
@@ -5942,8 +5952,6 @@
 		add="$libdir/$linklib"
 	      fi
 	    else
-	      # We cannot seem to hardcode it, guess we'll fake it.
-	      add_dir="-L$libdir"
 	      # Try looking first in the location we're being installed to.
 	      if test -n "$inst_prefix_dir"; then
 		case $libdir in
@@ -6089,7 +6097,17 @@
 		  fi
 		  ;;
 		*)
-		  path="-L$absdir/$objdir"
+                  # OE sets installed=no in staging. We need to look in $objdir and $absdir, 
+                  # preferring $objdir. RP 31/04/2008
+                  if test -f "$absdir/$objdir/$depdepl" ; then
+		    depdepl="$absdir/$objdir/$depdepl"
+		    path="-L$absdir/$objdir"
+                  elif test -f "$absdir/$depdepl" ; then
+		    depdepl="$absdir/$depdepl"
+		    path="-L$absdir"
+                  else
+		    path="-L$absdir/$objdir"
+                  fi
 		  ;;
 		esac
 		else