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BloggingStocks
- Lehman earnings fall for third quarter in a row, but beat expectations
Filed under: Earnings reports, Goldman Sachs Group (GS), Morgan Stanley (MS), Lehman Br Holdings (LEH), Bear Stearns Cos (BSC)
Lehman Brothers (NYSE: LEH) reported an earnings drop [subscription required] for the third quarter in a row, but the drop was less than what analysts had expected. The last time Lehman Brothers earnings fell three quarters in a row was in 2002. Things could have been worse, but gains in equity sales and trading helped to soften the blow from the $830 million losses related to the credit crisis and mortgage mess. Lehman wrote down $700 million in the third quarter, and thinks the write-downs are finally done.
The company reported that net revenue from its equities capital markets business almost doubled over last year's. The record-high net revenue for the quarter in its equities business was $1.9 billion.
"We are not calling a bottom, but suggesting we are good at diversifying risk," Chief Financial Officer Erin Callan told analysts and investors on a conference call, according to the Wall Street Journal. Lehman expects slower economic growth in 2008, but expects company growth to rebound thanks to investment banking products being marketed abroad. Lehman slimmed down its loan commitments by about $17 billion to $10 billion since the end of the third quarter.
Lehman's stock has dropped about 26% since its high of $81.51 in January 2007. It was changing hands at $60.21 at 1:30 p.m. EST and heading lower, down about 2.5% on the day.
Lehman was first in the financial stocks earnings parade for this quarter. Goldman Sachs (NYSE: GS), Bear Stearns (NYSE: BSC) and Morgan Stanley (NYSE: MS) are due to report next week.
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- Huge bonuses for head of Goldman (GS) and Lehman (LEH)
Filed under: Management, Goldman Sachs Group (GS), Lehman Br Holdings (LEH)
It's good to be king. The heads of Goldman Sachs (NYSE: GS) and Lehman Brothers (NYSE: LEH) will get staggering bonuses despite modest earnings and falling share prices. Perhaps the fact that they are still in business or that they did not do as badly as companies like Bear Stearns (NYSE: BSC) counts for something.
According to The Wall Street Journal, Lehman CEO Richard S. Fuld Jr "has received a restricted-stock grant valued at $35 million." The company's earnings were down slightly in the quarter ending August 31, but the investment bank said that the worst of its financial problems might be behind it. Go tell that to the shareholders. Lehman's shares are down 21% this year.
At Goldman Sachs, management is handing out bonuses. According to the FT, CEO Lloyd Blankfein is "expected to lead the pack with a 30% increase in his pay to about $70m." The paper added that "insiders said Goldman's impressive performance this year, including a 32% rise in return on equity over the first three quarters." Goldman's stock is up about 6% this year, but has done no better than the market at large.
The debate over executive pay starts every year about this time. It never gets anywhere, but the huge numbers make good headlines. It is a shame that Wall Street executives will be compensated well for not doing as badly as others in their industry. It comes across as an awfully thin excuse.
Douglas A. McIntyre is an editor at 247wallst.com.
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- Where to invest in 2008, best affordable suburbs & best places to park cash - Today in Money 12/13
Filed under: Money and Finance Today, Bank of America (BAC), Costco Wholesale (COST), Goldman Sachs Group (GS), Merck and Co (MRK), Lehman Br Holdings (LEH)
In the News: · Wholesale Prices Surge 3.2% in November; Largest Gain Since 1973 · Retail Sales Surge in November · Lehman Brothers Profit Drops, But Tops Estimates · Costco Profit Rises on Membership Growth · Merck Recalls Common Children's Vaccine · Bank of Ame