Lehman (LEH) Impresses No One

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The press release was a mile long.

Lehman "intends" to sell 55% of its money management unit.

Lehman "intends" to spin off to its shareholders $25 billion to $30 billion of its commercial real estate portfolio into a separate publicly- traded company, Real Estate Investments Global. It is very hard to see the value in the asset that stockholders will get from that.

Lehman will also do the regular things to save money. It will cut its dividend to $.05 to save $450 million.

But, the bad news was genuinely bad. Lehman said it is expected 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.

To put a point to it, there was nothing in the news to say that Lehman had done anything material to save its hide. It would still crater and send shareholders under.

With its stock down 45% yesterday, this was the best Lehman could do to keep the shares from trading down another 50% today. It gambled that it could avoid that by releasing marginally good news.

Almost nothing has changed.

Lehman is still operating on the ledge. If credit markets get worse, the Dutch Boy can’t save the city.

Douglas A. McIntyre