Lehman lost $2.8 billion in Q2, about an order of magnitude more than expected. If nothing else, this is yet another huge blow to the firm’s credibility.
On the positive side, Lehman Brothers (LEH) did also raise another $6 billion of emergency capital (that, as of last Friday, it was still insisting it didn’t need), so the stock probably won’t go to zero. Existing shareholders are getting massively diluted, however:
Lehman unveiled plans Monday to raise $6 billion of fresh capital from an array of investors which, according to a person familiar with the matter, include the New Jersey Division of Investment.
The move comes as the firm said it expects a second-quarter loss of about $2.8 billion. Until recently, most analysts who follow Lehman have been predicting a loss of about $300 million. Shares fell 11% in premarket trading.