WORLD> America
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WORLD> America
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Lehman, in $4bn loss, fights for life
(Agencies)
Updated: 2008-09-11 09:17 On Wednesday, his stance appeared to change, saying only that he would show the board reasonable offers. "That's a big step for Dick Fuld," said Walter Todd, portfolio manager at Greenwood Capital Associates and a former banker at Lehman. "He's been adamant about staying independent since Lehman was spun out from American Express" in 1994. Moody's said if Lehman finds a "stronger financial partner," its credit rating could be upgraded, but a failure to do a deal would likely result in a downgrade. Ratings cuts would make it tough for Lehman to stay in some businesses. 'Right Track' Lehman's management put a brave face on their predicament, saying on a conference call they do not believe they need to raise further capital after the planned asset sales. "We're on the right track to put these last two quarters behind us," Fuld said. Still, its market value has dropped more than $40 billion since February 2007. Shares of other financial sector companies also fell as investors worried about credit losses and capital needs. Washington Mutual Inc stock dropped more than 30 percent to its lowest levels since 1991. Lehman posted a loss of $5.92 per share for the third quarter ended August 31, while net revenue was negative $2.9 billion, reflecting the write-downs. Analysts' average target was a loss of $3.43 per share on revenue of $88 million, according to Reuters Estimates. The cost of protecting Lehman's debt for five years climbed 1 percentage point to 5.75 percentage points on Wednesday, or $575,000 a year to protect $10 million of debt, according to Phoenix Partners Group. Worried Workers Lehman will cut the dividend to 5 cents per share from 68 cents, saving $450 million a year. It said it has eliminated 1,500 jobs since May 31. Employees are worried about more cuts. In an interview outside Lehman's headquarters in New York, a capital markets employee who asked not to be named said morale inside Lehman is low, with many colleagues looking for new jobs. "I'll wait today or tomorrow and make a decision based on the stock price," he said. Hany Besha, who operates a coffee truck outside the Lehman headquarters, said: "One of my customers told me, 'I don't know if I will see you tomorrow or not."' Lehman was created in Montgomery, Alabama by three brothers who emigrated from Germany. The Lehmans accepted cotton from local farmers as currency, trading it for cash or merchandise. |
