Lehman Brothers tried to bolster investor confidence by releasing quarterly results and announcing measures to keep the firm afloat.
A day after trouble for investment bank Lehman Brothers (LEH) started a broad stock sell-off, major stock indexes opened higher Wednesday when Lehman made a series of surprise announcements designed to bolster investor confidence.
On Tuesday, an investment deal with a South Korean bank appeared to fall apart, causing the investment bank’s shares to plunge 45%. That prompted Lehman Brothers to release earnings a week early and announce measures to keep the firm afloat.
Lehman Brothers posted a preliminary loss of $3.9 billion in the third quarter. Losses on bad investments totaled a net $5.6 billion. Investors worried Lehman needs capital to stay afloat.
The firm will slash its annual dividend to 5 cents and it will spin off to shareholders Lehman’s $25 billion to $30 billion commercial real estate portfolio. The firm plans to sell a majority interest in its investment management division, as well. Executives say they are committed to exploring all strategic options, which could include a sale of the company.
Lehman shares opened higher on Wednesday.