Stock Market News: Lehman Brothers (LEH) Has a Plan
This morning, Lehman Brothers (LEH) announced a plan to try and save itself, even as it acknowledged an almost $4 billion loss. The company is battling for survival, and has outlined its ideas for raising capital. These ideas mainly focus around these three steps:
- Spin off of retail real estate into a different company.
- Sell a majority stake in the investment management division of the company.
- Cut the dividend from 68 cents a share to 5 cents a share.
The Wall Street Journal reports on the largest benefit — the stake in the investment management division:
Lehman’s plans to sell a majority interest in its investment-management division are expected to result in a tangible book value benefit of more than $3 billion. The company expects to maintain the majority of its pretax income from the unit, which include Neuberger Berman, Lehman’s prized asset-management division that was rumored in recent months to be on the chopping block.
Dividend stocks to continue taking hits?
For those who rely on regular dividend payouts to provide them with income, this is yet another blow. There has been a general trend amonst dividend paying stocks to cut to the bone. Fannie and Freddie both slashed dividends a great deal in the months leading up to the government takeover. And yet it didn’t work.
Other companies are likely to cut dividends as well, if the stock market continues in its overall bear trend (right now, stocks are a bit optimistic on the Lehman news).
No matter how noble Lehman tries to be, though, is there a possibility that it could fail anyway? And is this just posturing? There are those that figure that after a few days of desperate measures, the federal government will step in and bail the company out. After all, if Bear Stearns was “too big to fail,” isn’t Lehman?
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
Tags: stock market, stock market news, investing blog, Lehman Brothers,
divdends, investments, LEH
September 11th, 2008 at 8:40 am
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