-- Wall Street knocked Lehman Bros. leh stock 42% on Thursday, a no-confidence vote on its survival plan that further erodes the once-powerful investment bank's chances of remaining independent.
The 158-year-old firm now appears to have put itself up for sale. Lehman was in talks Thursday with other financial institutions that might be interested in buying it, according to the Associated Press, which cited bankers and executives at other financial firms who asked not to be named because they are not authorized to comment publicly.
French bank BNP Paribas, Deutsche Bank and Britain's Barclays could find it attractive, says Brad Hintz, an analyst at Sanford C. Bernstein. The Wall Street Journal said Bank of America bac was in talks with Lehman.
USA TODAY could not confirm the report, and both banks declined comment.
Lehman's chances for survival appeared to fade Wednesday after the firm reported a $3.9 billion quarterly loss and outlined steps to boost its capital reserves and reduce its risk profile.
CEO Richard Fuld, hoping to convince investors that Lehman could survive the crisis on its own, said it would sell a majority stake in its investment management division, spin off real estate assets and slash its dividend.
Analysts were unimpressed. Lehman shares were downgraded Thursday by major Wall Street firms, including Goldman Sachs, Deutsche Bank and Citigroup.
"Management did not successfully put to rest the issues that had been pressuring the stock," wrote Goldman Sachs analyst William Tanona. Lehman's inability to find a partner to inject capital into the firm did little to boost the market's confidence, he says.
That lack of confidence was evident in Lehman's shares, which fell $3.03 to $4.22. The steep drop wiped out $2.1 billion of the stock's value, reducing its market value to $2.9 billion. As a result, Lehman is no longer the nation's fourth-largest investment bank; it now ranks behind Raymond James, valued at $3.8 billion.
The endgame for Lehman is likely to involve a government-engineered bailout, says Bill Fitzpatrick, an analyst at Optique Capital Management. In March, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson helped broker JPMorgan Chase's purchase of investment bank Bear Stearns, which was deeply wounded by a 1930s-style run on the bank.
The Treasury Department is monitoring the situation, and the Federal Reserve is engaged.