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Lehman faces loss, $4 billion writeoff: report (Reuters)
2008.08.1914 minutes ago
(Reuters) - Lehman Brothers Holdings Inc (LEH.N) may post a third-quarter loss and suffer about $4 billion in write downs, according to an analyst at J.P. Morgan Securities, who also said a sale of the company's Neuberger Berman business was unlikely.
It will be another difficult quarter for Lehman, analyst Kenneth Worthington said.
Lehman continues to have significant exposure to mortgages and asset-backed securities, totaling $61 billion, he noted.
The analyst said the fourth-largest U.S. investment bank may suffer a $4 billion write down given a decline in residential and commercial mortgage-related indices. He also said Lehman may have already been selling assets especially in its commercial mortgage portfolio.
He expects Lehman to post a third-quarter loss of $3.30 a share, versus his prior profit view of $0.35, and widened his 2008 loss view for the company to $6.77 a share from his prior loss estimate of $2.35 a share.
"While we view Lehman as well managed and nimble, deteriorating fixed income asset valuations and leveraged loans have led to downward earnings revisions," Worthington said.
Analysts including Merrill Lynch's Guy Moszkowski, Deutsche Bank's Michael Mayo and Fox-Pitt's David Trone have also forecast a third-quarter loss at Lehman.
SALE OF NEUBERGER?
Several Wall Street analysts have been speculating a possible sale of all or a portion of Lehman's asset-management business -- a move mentioned in media reports as a possibility for weeks.
Experts estimate the business, whose core is Neuberger Berman, could be worth about $8 billion.
However, Worthington said he does not think Neuberger is up for sale.
"We don't think the investors and rating agencies would welcome this divestiture, which brings a steady cash flow, diversification and a lower compensation ratio," he said.
Lehman bought Neuberger Berman in 2003 for about $3.1 billion.
On Monday, a source familiar with the situation told Reuters that Lehman has been marketing its asset management unit to a number of buyers, including private equity firms.
Shares of Lehman have fallen about 77 percent since the start of this year. They closed at $15.03 Monday on the New York Stock Exchange.
(Reporting by Neha Singh in Bangalore; Editing by Jarshad Kakkrakandy)
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