Lehman Brothers Holdings Inc.’s rescue plan got a dismal reception from Wall Street on Thursday, with shares of the battered bank plunging about 40%.

The stock price unraveled in early trading after analyst reports cast doubt that the nation’s fourth-largest investment bank can survive.

Its shares fell $2.91 to $4.34 — down more than 94% from their 52-week high of $67.73.

Other financial stocks were also pulled lower amid fear that banks and brokerages still have more pain to go before the year-old credit crisis begins to wane. Merrill Lynch & Co. shares fell 11%, Goldman Sachs Group Inc. dropped 3%, and Washington Mutual Inc. shed 22.9%.

Yesterday, the 158-year-old investment bank outlined a blueprint to sell off its well-respected investment management unit and spin off its commercial real estate assets. The strategy is part of a last-ditch effort to rescue the investment bank from bad bets on real estate-related holdings that have already laid low other storied Wall Street firms.

The Lehman Chief Executive, Dick Fuld, 62, the longest serving CEO on Wall Street, also said the firm would examine all other options — including a sale of the company he joined right out of college.

For investors, the strategy seemed long on hope, short on details and raised questions about timing and execution, analysts said. Investors had hoped to see a solid plan in place to offset almost $6.5 billion of losses during the past two quarters.

“Management did not successfully put to rest the issues that had been pressuring the stock,” a Goldman Sachs analyst, William Tanona, wrote in a research report.

The fourth-largest American nvestment bank plans to sell a 55% stake in its investment management division, which includes its prized Neuberger Berman asset management unit. Lehman said it is in advanced talks with several bidders, but refused to give a timeline about when a deal would take place.

Investors were discouraged that no buyer had been named. Lehman began pitching a deal to private-equity firms two months ago. Analysts believe the sale could fetch about $3 billion.

Further, the firm is also taking a big bet that a spin off of its commercial real estate assets will get a strong market reception in early 2009. The new entity will be called Real Estate Investments Global, and will be run by independent management.

Wall Street remains skittish about financial stocks since a run on Bear Stearns caused the American government to orchestrate its sale to JPMorgan Chase & Co. in March. Lehman, the biggest American underwriter of mortgage-backed securities, was automatically scrutinized.

Global banks have lost more than $300 billion from write-downs since the housing slump evolved into a full-blown credit crunch.

Analysts believe that trying to engineer a reconstruction of Lehman Brothers will be a tough proposition considering the environment. The current financial crisis shows no sign of ending soon, credit conditions remain tight and big acquisitions are rare. Big institutional investors — like state-owned sovereign wealth funds and private-equity firms — aren’t as willing to make major investments.

If all else fails, Mr. Fuld left open the option of selling the company.

“We remain committed to examining all strategic alternatives to maximize shareholder value,” Mr. Fuld said on a conference call yesterday.