Lehman’s survival in question, employees worried
Lehman Brothers shares fell as much as 46 percent after the
company has entered into talks with potential buyers for the sale of its assets
to cover losses from toxic real estate investments.
The shares have lost more than 90 percent from their 52-week
high of $67.73 last November amid mounting uncertainty about the bank’s ability
to continue as an independent entity. The drop reportedly reduced Lehman's
market value to about $3.2 billion.
According to Bloomberg which cited the Yomiuri newspaper as
its source, Japan-based investment bank Nomura Holdings Inc may bid for a stake
in Lehman. Goldman Sachs reportedly has no plan to buy Lehman without financial
backing from the Federal Reserve or Treasury.
The investment bank reported a preliminary net loss of
approximately $3.9 billion for the third quarter of fiscal 2009, compared to a
net loss of $2.8 billion for the same quarter of fiscal 2008, and net income of
$887 million for the third quarter of fiscal 2007.
Lehman said it is in the process of cutting the dividend,
spinning off real- estate holdings and selling a majority stake in its asset-management
business in an attempt to recapture investor confidence. Traders and analysts
appeared unimpressed with the steps outlined by the investment bank
After reports that the measures would not be enough to
restore confidence, morale among Lehman employees dropped and many employees
are reportedly looking for jobs elsewhere. Lehman had 25,935 employees at the
end of August.
Citigroup and Goldman Sachs lowered their ratings on the
stock to "hold" from "buy." Goldman removed the stock from
its Americas
buy list. On Wednesday, Moody's Investors Service placed Lehman Brothers
Holdings Inc.'s A2 long-term ratings on review with direction uncertain.
As the investors are worried about the health of their investments,
a few financial firms have witnessed steep declines in their stock values.
American International Group Inc. lost $1.65, or 9.5 percent, to $15.85 and
Washington Mutual Inc. fell 22 cents, or 9.9 percent, to $2.09. Among other
financials, Merrill Lynch & Co. dropped $3.05, or 13 percent, to $20.25,
and Wachovia Corp. lost $1.15, or 7.6 percent, to $13.93.
