Lehman Brothers Holdings, Inc. (LEHMQ.PK)

NetscribeFinancl (< 20) Submitted: 2/12/07 7:09 AM : Start Price: $81.45 LEHMQ.PK Score: -62.44

Lehman Brothers is a global investment bank, serving the needs of governments, municipalities, institutional clients, and high net-worth individual customers. Founded in 1850 and with presence in all major financial centers, it services include equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity.

Lehman Brothers finished the latest quarter with total revenues increasing by 22% to $4.5 billion supported by global equity markets rising by 6%, declining oil prices and Dow Jones hitting an all time high. Capital markets generated 67% of the revenues and investment-banking revenues increased 5% with mergers and acquisition transactions worth $71 billion. The bank expects the global economy to grow by 2.8% in 2007 and the interest rate outlook to remain benign with Federal Reserve stopping rate hikes.

Fixed income contributes more than 50% of the revenues and still remains a bright spot with positives estimates of fixed income securities growing to $43 trillion from current level of $31 billion. However it has plans of diversifying its revenue base and seeks to generate more from equity and fee based income sources. Investment banking will see another good year as financial sponsors sitting with $ 325 billion idle capital would drive mergers and acquisitions by 15% apart from providing liquidly. Global expansion seems to be of a priority as Asia and Europe have contributed to 68% of equity issuance and 48% of fixed income under writing volumes. Non-U.S. operations contributes more than one third of the revenues and has made inroads into the Japanese market with the completion of its first residential securitization. Lehman is one of the efficient firms in the Wall Street with their manager bonus tied to the company’s return on equity and good corporate earnings would make 2007 another promising year.

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