had to install libtool to emerge media-libs/xine-lib-1.1.2-r2. Currently, this is not a part of the dependencies listed in the ebuild. A version of libtool was being used at compile time, probably supplied by xine-lib. The problem is that that libtool did not handle the --tag=cc option and exited. emerged sys-devel/libtool-1.5.22 and xine-lib compiled. My system is x86 and has been upgraded to 2006.1 profile from 2005.0 clean install.
sys-devel/libtool is part of system (read profiles/base/packages); not exactly an ebuild fault that you've unmerged it without any good reason.
As jakub said it's part of system, but anyway forced it on for sake of completeness.