The rumours surrounding Lehman Brothers having a shocking second quarter were confirmed today as they reported an abysmal 2Q08 result.
Lehman Loses $2.8 Billion, Plans to Raise $6 Billion
Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, reported a record $2.8 billion second-quarter loss and said it will raise $6 billion in capital in a public offering.
Lehman fell as much as 11 percent in New York trading after the firm said it sold about $130 billion of assets during the quarter. The New York-based bank reduced mortgage-related assets and leveraged loans by about 20 percent, it said today in a statement. The figures are preliminary and the final results will be released June 16.
Chief Executive Officer Richard Fuld, 62, is adding to the $8 billion he raised since February to quell concern that the collapse of the mortgage market would bring his firm down. Financial companies have raised more than $285 billion from investors to make up for almost $390 billion in writedowns and credit losses.
``I am very disappointed in this quarter's results,'' Fuld said in the statement. ``However, with our strengthened balance sheet and the improvement in the financial markets since March, we are well-positioned to serve our clients and execute our strategy.''
Lehman dropped $3.49 to $28.80 at 7:24 a.m. in early New York trading after the company said it would sell common and preferred stock that converts to common shares in three years. It didn't say how much of each type would be sold. The company had $3.7 billion of writedowns on its portfolio of mortgage- related assets and leveraged loans during the quarter as hedges against the positions lost money, the bank said.
Dick Fuld has continually stated that Lehman wasn't suffering as much as the other investment banks and didn't need to take the kinds of writedowns that other IB's have. Well guess what? Fuld should go, he has basically lied to the market all along and David Einhorn correctly called him on it. Off with his head!