Lehman (LEH) will release its results tomorrow morning, a week ahead of schedule. Since the broker’s stock was down 45% today and and almost 90% from its 52-week high, it would be easy to say that the move is desperate.
The management at Lehman is probably better poker players than they are bank executives. Releasing earnings early only prevents the firm’s stock from collapsing completely if the figures are relatively good or the bank can report that it has found an investor to take a large piece of equity or buy money management unit Neuberger Berman.
Lehman watched Bear Stearns go under as it lost control of its destiny over a period that only lasted 48 hours. When the market opens tomorrow, Lehman faces what could be its last day of trading. Another huge sell-off will send Lehman’s customers to the exits. The company’s capital base will erode sharply over the course of the day, and the head of the New York Fed will be on the phone trying to find a private buyer.
Lehman probably can’t announce results better than most analysts expect. The value of its commercial loan portfolio and mortgage-backed paper haven’t defied the gravity that is hitting all of its peers.
What Lehman can walk through the door with is several billion dollars of new capital, probably from a foreign financial firm that wants a big presence in the US. The Royal Bank of Canada has been put on that list. So has Japanese financial giant Nomura.
Lehman has found an infusion of cash. In twelve hours, the rest of the world will know where the money came from.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks