Lehman Brothers (LEH)

[millionairemind]

Equities suffer as Lehman shares fall 45%
By Francesco Guerrera in London and Michael Mackenzie and Greg Farrell in New York
Published: September 9 2008 18:55 | Last updated: September 10 2008 00:43

US stocks suffered their worst fall of the year as a 45 per cent drop in Lehman Brothers shares renewed fears about the health of the global financial system.

The S&P 500 fell 3.4 per cent, reversing the 2.1 per cent gain on Monday that greeted the US government’s takeover of mortgage financiers Fannie Mae and Freddie Mac over the weekend.

US Treasuries rallied as investors sought the safety of government debt, reckoning that the weakening US housing market would slow economic growth.

Crude oil futures in New York fell $3.96 to $102.38 a barrel as investors bet that economic sluggishness would reduce the demand for energy.

Lehman said late on Tuesday that it would unveil “key strategic initiatives for the firm” on Wednesday when it announces its third-quarter earnings. It originally had scheduled the earnings report for September 18, but moved it forward to calm investors.

Lehman led the market lower on worries it would be unable to raise capital to bolster its balance sheet before reporting third-quarter earnings. Its shares fell $6.36 to $7.79, giving it a market value of $5.4bn – a fraction of its book value.
- I am very wary when investors says things like "WAH THIS STOCK GOT SUCH A SUCH A NAV, BOOK VALUE ETC ETC....", sure is a good value play whatever play

Standard & Poor’s warned it might downgrade Lehman’s single-A credit rating, saying it was reviewing the bank’s rating because of “heightened uncertainty about Lehman’s ability to raise additional capital, based on the precipitous decline in its share price in recent days”.

Lehman is expected to have suffered billions of dollars in credit-related writedowns in the third quarter. For months, it has been looking at ways to raise capital.

The options have included selling a stake to an investor, selling all or part of its well-regarded asset management unit and spinning off its commercial real estate assets into a “bad bank” structure that could be partly funded by outside investors.

Lehman’s shares fell after a newswire report cited an unnamed Korean government official as saying that Korea Development Bank, a state-run lender, had decided not to invest in Lehman.

Korea’s financial watchdog later denied the report, but bankers close to the situation said Lehman was unlikely to clinch a deal to sell a large stake to KDB before reporting third-quarter results. The two sides have been at loggerheads over the price to be paid for the stake, with KDB balking at the valuation demanded by d**k Fuld, Lehman’s chief executive, according to people close to the talks.

Lehman declined to comment, but people close to the situation said that even if the KDB deal did not materialise, the bank had other options to raise capital.

Among other financial stocks, Washington Mutual fell 19.9 per cent, AIG 19.3 per cent and Wachovia 14.5 per cent.

Additional reporting by Jung-a Song in Seoul

Copyright The Financial Times Limited 2008

[winston]

[b]Lehman led the market lower on worries it would be unable to raise capital to bolster its balance sheet before reporting third-quarter earnings. Its shares fell $6.36 to $7.79, giving it a market value of $5.4bn – a fraction of its book value.

- I am very wary when investors says things like "WAH THIS STOCK GOT SUCH A SUCH A NAV, BOOK VALUE ETC ETC....", sure is a good value play whatever play

Hi MM,

I would probably look at it on a case to case basis.

If it is a simple business with hard assets, we could probably give the numbers more credibility.

If it is in a complex business that even the experts have a hard time determining the values, then we may need to be more careful.

Take care,
Winston

[iam802]

KDB seeking control of Lehman for $6 billion: report

http://www.reuters.com/article/innovati ... 4820080910

SEOUL (Reuters) - State-run Korea Development Bank is seeking a controlling stake in Lehman Brothers for about $6 billion, Yonhap reported on Wednesday, citing a high ranking KDB official.

South Korean news agency Yonhap quoted the unnamed official as saying the two sides were negotiating and the deal's size was larger than the 25 percent stake mentioned in previous reports.

[millionairemind]

802 - Futures immediately moved when this news was released..

Maybe KDB wanted to buy Lehman at 45% off the price last Friday??

[iam802]

Think the KDB playing game with LEH.

I recall seeing a headline early in the morning saying the deal is off.

That's how things are when you are down.

[millionairemind]

Now they said off again??? WL.. futures immediately dropped!

http://www.reuters.com/article/newsOne/ ... 6520080910

But a South Korean government official said on Wednesday state-run Korea Development Bank has ended talks with Lehman over a possible investment in the U.S. bank due to lack of progress.

"No more talks are under way on a deal between the two sides," the official briefed on the matter told Reuters by telephone, asking not to be identified before any public announcement is made.

Separately, South Korea's Yonhap news agency quoted a high-ranking KDB official as saying that KDB was seeking a controlling stake in Lehman for about $6 billion, but Cho Hyun-eek, a KDB spokesman, said the bank was surprised by the report and declined to make further comment.

[blid2def]

Steady lah; Han Kok govt play futures, intraday pump and dump, huat huat.

[millionairemind]

Just out on Bloomberg..

Han Kok Gahmen very smart leh..

Korea Development Bank Says It Ended Talks With Lehman Brothers
By Seonjin Cha

Sept. 10 (Bloomberg) -- Korea Development Bank has ended talks to buy a stake in Lehman Brothers Holdings Inc., the fourth-biggest U.S. securities firm, the South Korean bank said.

``We've ended the negotiations as there's differences over the terms of the deal and considering financial market conditions at home and overseas,'' Korea Development said in an e-mailed statement today.

Yonhap news earlier reported that KDB is in talks to buy a stake in Lehman for about $6 billion.

[iam802]

Comparing Lehman's market value to.....

http://www.reuters.com/article/idUSN0934964220080910

The firm's stock market value is now equivalent to:

-- One-twelfth the value of Goldman Sachs Co Inc

-- One-eighth the value of Merrill Lynch Co Inc

-- One-fifth the value of discount broker Charles Schwab

-- Half the value of online discount broker TD Ameritrade

-- About double the sale price for one New York office building, the GM Building, when it was sold in May

-- Five days of Wal-Mart Stores Inc sales

-- About half the earnings reported by Exxon Mobil in the second quarter.

[kennynah]

lost some 3.9bil last quarter...to cut dividend by 92%....




******
Lehman Brothers reports preliminary Q3 loss of $3.9 Bln; to cut annual dividend by 92% - Update
9/10/2008 8:27 AM ET

(RTTNews) - Investment bank Lehman Brothers Holdings Inc. (LEH: News ) on Wednesday reported a preliminary net loss for the third quarter and said it would take actions to reduce commercial real estate, residential mortgage and other less liquid asset exposures. The company also said it intends to sell majority stake in its coveted investment management division in an attempt to raise additional capital and slash its annual dividend by 92%.

The company reported a preliminary net loss for the third quarter of $3.9 billion, or $5.92 per common share, compared to a net income of $887 million, or $1.54 per common share in the prior-year quarter. On average, sixteen analysts polled by First Call/Thomson Financial expected a loss of $3.35 per share.

The net loss was driven primarily by gross mark-to-market adjustments resulting from writedowns on commercial and residential mortgage and real estate assets.

During the fiscal third quarter, the company expects to incur negative gross mark-to-market adjustments on assets of $7.8 billion, including gross negative mark-to-market adjustments of $5.3 billion on residential mortgage-related positions.

Net revenues for the quarter are expected to be negative $2.9 billion, compared to positive $4.3 billion for the third quarter of fiscal 2007. Analysts expected the company to report positive revenues of $286.26 million for the quarter.

Net revenues for the latest quarter reflect negative mark-to-market adjustments and principal trading losses, net of gains on certain risk mitigation strategies and certain debt liabilities.

Lehman Brothers said it has taken several steps to significantly reduce its real estate portfolio in the third quarter. The firm reduced its residential mortgage exposure by 31% to $17.2 billion. Further, Lehman is formally engaged with BlackRock Financial Management, Inc. to sell approximately $4.0 billion of its UK residential mortgage portfolio and expects to complete the sale within the next few weeks, reducing its exposure by 47% to $13.2 billion. The company also reduced its commercial real estate exposure by 18% to $32.6 billion.

((k says : stock price now discounted to a 47% reduction in bad mortgage related assets...so, 53% more to go...

hmmm.... FAs, lai leh....time to do work... what does this translate to in stock price...

so much FA talk....show some stuff leh...))