Tuesday, June 12, 2007
Out of the Gate: Lehman Brothers Jumps (AP)
Shares of Lehman Brothers Holdings Inc. ticked up at the opening bell Tuesday after the investment bank said a move to expand its business and cut its reliance on bond trading has paid off.
The Wall Street brokerage early Tuesday said it earned $1.26 billion in the fiscal second quarter, with revenue of $5.51 billion handily topping analysts' expectations.
Robust stock markets fueled the quarter. Lehman Brothers reported $1.7 billion revenue from brokering and trading stocks, nearly double stock market revenue from the second quarter of 2006. The bank reported strong results for buying and selling stocks on behalf of clients, trading stocks for its own accounts, and dealing options and other contracts tied to the value of stocks.
Analysts said the revenue from trading stocks underscores how prescient Lehman Brothers' diversification strategy was. Nearly half the bank's revenue came from outside the U.S., and Lehman reported record results for advising on corporate deals, selling debt and managing investments.
Meanwhile, Lehman Brothers' bond business was one of the few units to report a decline in revenue, as the meltdown in the subprime mortgage industry hurt the value of bonds backed by home loans.
Lehman Brothers' stock rose $1.59, or 2.1 percent, to $77.25 in morning trading Tuesday. The shares have traded in a range of $58.37 to $86.18 in the past year.