Skip to main content

Lehman Brothers: Losses Worse Than Expected, Raising Even More Capital

  • Author:
  • Updated:

Lehman Brothers said this morning that it plans to raise $6 billion through the sale of common and preferred stock. It projects a second-quarter net loss of $2.8 billion. Both the extent of the capital raising and the losses are even higher than indicated by reports and rumors circulated this morning.
It's very strange that Lehman completely failed to manage the expectations over the weekend, allowing the Wall Street Journal to go forward with the story that it was raising $5 billion. It's rather easy for a brokerage to send journalists signals meant to avoid this kind of surprise but Lehman doesn't seem to have availed itself of this.
Perhaps Lehman wanted the Wall Street Journal to get the story wrong, upset that the Journal had gone ahead and reported last week that Lehman was looking to raise capital. But the Journal had that story right, and Lehman's behind the scenes denials that it had plans to raise money or needed to raise money turned out to be wrong. Lehman's credibility looks even more damaged this morning.