Lehman (LEH) Q2 Disastrous, Credibility Destroyed--$6 Billion Enough?

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.

See Also:
How Lehman Destroyed Its Credibility, Pitch By Pitch
Lehman CEO Dick Fuld Should Step Down

Lehman Deathwatch: Analyst Says The Firm’s Clients are Getting Nervous
Lehman’s New Plan To Save Itself from David Einhorn: Rights Offering

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In