Top Firm May Have To Cut Another 20% Of Workforce
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Although Lehman is thought to have already cut over 5,000 jobs, an additional cull may now be required as the price for reducing the firm's cost base and remaining independent. Fuld is understood to be staying his hand at present, however, and hopes to hold off from making another round of lay-offs for as long as possible.
According to the news agency, executives inside Lehman are now conceding that something drastic needs to happen in order to safeguard the firm's franchise. Although Reuters quotes an unnamed 'person close to the company' who said that the firm is not actually in talks with anyone about a takeover at the moment, CNBC says that Fuld has not ruled out a sale to the likes of Barclays, HSBC or Toronto Dominion. There have also been reports that private equity firm Blackstone might be interested in taking a stake in Lehman.
In the meantime, a number of respected bank analysts have turned the screw further. Ladenburg Thalmann analyst Richard Bove is now forecasting that Lehman will post a 2008 full-year loss, Deutsche Bank analyst Mike Mayo feels that Lehman is likely to have to take an additional $2bn in writedowns (mainly on its commercial real estate portfolio), while Oppenheimer analyst Meredith Whitney wrote in a report this week that 'the size of (the firm's) recent capital raise puts serious pressure on Lehman's ability to deliver on meaningful earnings-per-share growth over the near to medium term'.
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