Big Trouble at Lehman Brothers

by Derek Loosvelt | August 21, 2008

Today the Financial Times reported that battered Lehman Brothers had recently tried unsuccessfully to sell half of its shares to two Asian banks: China's CITIC Securities and the Korea Development Bank.

The news of Lehman's attempt to get a huge capital infusion—coming just days after it announced plans to sell its asset management units—likely means its losses are deeper than it has led on, and more write-downs are on the way. The news also meant that investors continued to devalue Lehman’s stock and Wall Street analysts continued to predict tougher times ahead for the fourth largest investment bank in the U.S.

Lehman’s stock, already down 80 percent from its high in the past 12 months, has fallen another 5 percent in value today. Meanwhile, Citi's Prashant Bhatia severely cut Lehman's third quarter 2008 earnings estimate, while also slashing estimates for Goldman Sachs and Morgan Stanley. According to Bhatia, Lehman will write-down $2.9 billion in bad assets during the third quarter, and Goldman and Morgan Stanley will write-down $1.8 billion and $1.7 billion, respectively.

Filed Under: Finance


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