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 Grab your life preserver! Lehman Brothers Inc. shares plummeted almost 45% Tuesday amid recent media reports that talks with Korea Development Bank have ended. But come on, really, all is not lost yet, or is it? Is this just another case of one rumor spurring another rumor spurring another rumor? Let's take a look at all of the rabble babble on the Internet.
Not surprisingly, Lehman's shares began sinking shortly after Dow Jones Newswires reported that South Korea's financial regulator said talks about a possible investment had ended. These were on top of rumors that interested buyers could also include Japanese banks Mitsubishi UFJ Financial Group Inc., Nomura Holdings Inc.
and the U.K.'s HSBC Holdings plc.
Of course the breakdown of talks doesn't come as a surprise to everyone on Wall Street. According to The Deal's Vipal Monga's recent newsweekly story: One source close to Lehman calls the rumors, at this point, misguided. "I've never seen such inaccurate reporting," the source says, particularly in the Korean and U.K. press, which has been dutifully repeated around the world. He asserts there's no looming announcement of a takeover, although he won't deny that Fuld has been courting banks in Korea.However speculative stories aren't limited to the South Korean press either. There was already enough speculation and uncertainly in U.S. media concerning rumored bids from buyout shops for both Neuberger Berman LLC and minority stakes in several hedge funds. CNBC reported that discussions are going on this week. Kohlberg Kravis Roberts & Co., Hellman & Friedman LLC and Bain Capital LLC are reportedly all in the auction, which could fetch $7 billion or more. If the South Korean speculation and the Neuberger rumors weren't enough, then all of the management changes and talk of layoffs added an extra layer of, "Huh?," to the whole circumstance. Plus, as CNBC reports, "There are already signs that Lehman is putting a new team in place to deal with this new future. Fuld is handing more of the day-to-day responsibility to his No. 2, McDade, and people inside the firm expect him to step down as CEO, handing that job to McDade." All of the chatter comes days ahead of the firm's third-quarter earnings report, which is scheduled for next Thursday. Analysts were expecting $3.5 billion in write-downs when the investment bank reports its third-quarter earnings. However, rumors are now circulating that Lehman management is considering moving up the release of its third-quarter earnings, which could either be good or bad news. So what do investors say? Here's the latest quotes from the Yahoo and Google discussion boards. Fed: This is the Fed calling. Would you be interested in a Fed sponsored purchases of a smaller investment bank called Lehman Brothers?. Will we be seeing a FIVE DOLLAR STOCK. Come out Mr. Fuld and make your statement on the current state of the bank. This is your duty to your shareholders at these dire times. BEAR STERNS BOOK WAS $100 WHEN WIPED OUT TO $2. LETS BE REALISTIC. So now Lehman HAS to preannounce today or it will plummet for sure. So will Lehman release earnings Tuesday as the rumors say? Could we see asset sales by the end of the week? One thing's for sure, we will definitely hear more rumors. - Maria Woehr
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