Lehman survival in doubt
This is all over the news today, but the basic idea is that stockholders and Wall Street were, let’s put it nicely, underwhelmed with the restructuring and rescue plan laid out by Lehman Brothers management on yesterday’s conference call. I’d be underwhelmed too. Spinning off a couple of units and dumping debt don’t seem to be enough to rescue a company who is basically worth nothing.
From the AP:
For investors, the strategy seemed long on hope, short on details and raised questions about timing and execution, analysts said. Investors had hoped to see a solid plan in place to offset almost $6.5 billion of losses during the past two quarters.
“Management did not successfully put to rest the issues that had been pressuring the stock,” Goldman Sachs analyst William Tanona wrote in a research report.
More from naked capitalism:
I heard this rumor from two sources, that Lehman is in its final day or two and Goldman is willing to buy the firm, and the second source, who volunteered the information, is sufficiently well plugged in that I trust the reading. This came from a former senior employee:
A couple friends of mine from LEH trading desk called me this a.m. to say that mgmt has taken employees aside to let them know that the end should come in next 24-48 hours. Ratings agencies apparently told them that the steps were not sufficient to prevent a d/g, and LEH mgmt asked them to hold off for a day or so to give them a chance to resolve situation (with sale of company).
Apparently GS is willing buyer, but is buyer of last resort from LEH’s perspective, b/c they would keep very few LEH employees.