LAST CALL: LEHMAN TUMBLES AS UNCERTAINTY GROWS
AP
NEW YORK -
Lehman Brothers Holdings Inc. shares tumbled Monday amid investor uncertainty about how the nation's fourth-largest brokerage will find much-needed capital to help shore up its balance sheet. There remains intense speculation that Lehman Chief Executive Richard Fuld might be forced to sell off its Neuberger Berman asset management division to help buoy the investment bank's ailing balance sheet. Analysts believe such a sale would generate between $7 billion to $8 billion. A spokesman for Lehman declined to comment. The most likely deal would be to sell Neuberger Berman to its top management, according to analysts. However, an outright sale of the prized asset has been seen as harmful to both Lehman's revenue stream and debt ratings. Brad Hintz, a former Lehman Brothers (nyse: LEH - news - people ) chief financial officer who is now an analyst at Sanford C. Bernstein, said he believes the company should spin off Neuberger and sell some of its real estate businesses. He also projects the company will write down $4 billion to $5 billion in risky mortgage securities when it posts results later this month, and those losses could be offset by the Neuberger deal. There also have been reports that Fuld will split the company into two separately listed firms - creating what analysts call a "good bank" and a "bad bank." The investment bank's $32 billion portfolio of risky mortgage securities would be allocated to a new company supported by new debt and equity. That would free up the fixed-income and investment banking side of Lehman Brothers to operate without the problems caused by the mortgage portfolio. The split would also be funded through a major equity investment, most likely from a Korean or Japanese bank, according to several media reports. Lehman shares closed down $2.05, or 13 percent, at $14.15, having earlier dipped as low as $13.03. The stock has traded within a 52-week range of $12.02 to $67.73. Copyright 2008 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed