Lehman Brothers, Inc (NYSE:LEH) has recently announced its plans for the nearest future: plans how to avoid bankruptcy and save life of the company. During the last week we have seen a significant decrease in the LEH stock price. Since 08/09/08 the stock price has declined from 17.73$ (high) to 3.17$ (low), while the stock trading volume has increased dramatically. These all forces us to ask a question: will Lehman, which have once been very strong and famous bank go bankrupt? Life will show, but however there are some really inteesting signs in the current press release, which don’t make us quiet but make us to think more:
- Lehman plans to reduce commercial real estate. Commercial real estate exposure already reduced by 18%. The Lehman’s Real Estate assets will be spun-off to shareholders + independent and publicly traded company will be created. It will be named as Real estate Investments Global. Lehman hopes to end it until the first quarter of 2009 fiscal year. I think it will strengthen its balance sheet.
- Intention to sell a large stake in the investment management division (55% approximately). It includes the asset management, private equity and wealth management businesses. Lehman expects to receive 3.0 billion dollars + in intangible book value. after stake sale. However, the strategic relationship with Lehman will be maintained.
- Reduction in residential mortgages and other less liquid assets. Residential mortgage exposure reduced by 47% already. Lehman brothers intends to complete the sale of UK residential mortgage to BlackRock Financial Management (4.0 billion dollars approximately).
- Dividend reduction to 0.05$.
Financial Snapshot:
Last Price 3.65$
52 Week High 67.73$
52 Week Low 3.17$
Total Shares Outstanding 689.0 Million dollars
Market Capitalization 2.51 Billion Dollars
Earnings per Share -8.70$
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