After Stock Plummets 45%, Lehman Scrambles

Lehman Brothers Holdings Inc. said it will announce third-quarter results and “key strategic initiatives” tomorrow, a week earlier than planned, after the stock fell a record 45% in New York trading yesterday.Lehman, the fourth-largest American securities firm, said in a statement that it will report the results at 7:30 a.m. in New York. The company said it will host a conference call at 8 a.m. to discuss the firm’s performance, “outlook and strategy.” Lehman previously said it would release the figures on September 18.Led by its chief executive officer, Richard Fuld, Lehman has been negotiating with potential investors about obtaining a capital infusion and selling devalued mortgage assets that contributed to the firm’s $2.8 billion loss last quarter. Lehman’s shares fell $6.36 to $7.79 yesterday in New York after talks with Korea Development Bank ended. The stock has plummeted 88% this year, and analysts predict the firm will report more writedowns and losses today.The Korean lender is one of several companies that Lehman has been in discussions with in recent weeks, a person familiar with the matter said yesterday, declining to name the other potential bidders. Lehman is also talking with private-equity firms interested in buying its asset-management business, the person said.The lack of a deal “is depressing shareholders and infuriating insiders,” an analyst at Ladenburg Thalmann & Co., Richard Bove, wrote in a report yesterday. The bank “refuses to take what it believes are fire-sale prices for its key assets,” he said.A Lehman spokesman in New York, Mark Lane, and a spokesman from the Korea Development Bank, Cho Hyun Eek, declined to comment.Lehman plans to disclose how much of its mortgage holdings it managed to dispose of during the quarter and will spell out how it’s replacing capital depleted by losses on those assets, people familiar with the matter said before the firm issued the statement.The company is trying to raise capital and shed real-estate assets after $8.2 billion in writedowns and credit losses in the past year. Korean regulators told the development bank it would be “inappropriate” to pursue a Lehman acquisition. Nomura Holdings Inc., Japan’s biggest investment bank, may join bidders seeking a stake in Lehman, the Yomiuri newspaper cited the president of Nomura, Kenichi Watanabe, as saying last week.The Wall Street investment bank has been in talks with Kohlberg Kravis Roberts & Co., Carlyle Group and other private-equity firms interested in buying its asset-management unit, which includes fund manager Neuberger Berman.A Merrill Lynch analyst, Guy Moszkowski, said in a report Monday that Lehman may report a loss of $6.50 a share, wider than his earlier third-quarter loss estimate of $3.94. Oppenheimer & Co. analyst Meredith Whitney predicted Lehman will take a $4 billion writedown on residential and commercial mortgages and leveraged loans.Goldman Sachs Group Inc., Morgan Stanley, and Merrill Lynch & Co., the three biggest American securities firms, said yesterday after the close of regular trading in New York that they weren’t backing away from their smaller rival.“Goldman Sachs is a willing counterparty to Lehman Brothers across all our businesses,” a spokesman for Goldman, Michael DuVally, said. Spokespeople for Morgan Stanley and Merrill said their firms continue to trade with Lehman.Citigroup Inc., the biggest American bank by assets, UBS AG, and Credit Suisse Group AG, the two largest Swiss banks, and BlackRock Inc., the biggest publicly traded American fund manager, said they too are conducting business as usual with the firm.Standard & Poor’s said it may lower its A1 long-term rating on Lehman because the “precipitous decline” in the share price creates uncertainty about the firm’s ability to raise additional capital. S&P said Lehman’s liquidity is “sound,” noting the firm has the ability to borrow from the Federal Reserve.A spokeswoman for the Fed, Michele Smith, declined to comment on Lehman. A spokeswoman for the Treasury, Jennifer Zuccarelli, said, “We are monitoring markets and in regular contact with market participants.”The chairman of the U.S. Securities and Exchange Commission, Christopher Cox, is also staying abreast, according to agency spokesman John Nester.“Chairman Cox and top SEC officials are monitoring market developments and are in ongoing contact with market participants,” Mr. Nester saidMr. Fuld, 62, shuffled the top ranks of his firm for the third time in four months over the weekend. The head of Lehman’s international operations, Jeremy Isaacs, and the fixed-income chief, Andrew Morton, are leaving. Mr. Fuld replaced his associate of 30 years, Joseph Gregory, in June, naming Bart McDade as president.

After Stock Plummets 45%, Lehman Scrambles

After Stock Plummets 45%, Lehman Scrambles

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