Another day, another Lehman story.

Bloomberg quotes Bruce Foerster, a former Lehman executive who now runs investor advisory firm South Beach Capital Markets, who has commented: 'Lehman could bleed to death slowly. Will the firm outlive the speculation, or (will) the speculation hurt business enough to actually bring it down ? It's a tough call'.

Tough is good, though, for Lehman CEO Richard Fuld. Determined to save his firm and preserve his legacy, Fuld is said to have told friends last month: 'To put your head under the covers and hide is a useless exercise. When you get dealt a hand, react to it. Don't pretend it's going to go away. Create a plan, execute it, and get back to work'. But Fuld is in a tight spot. Although he retains the confidence of his stakeholders (clients, employees, shareholders and the board), he can't afford any more missteps. Under his watch, Lehman has come closer to the edge than probably any other time in its 158-year history (and the firm has had its share of scares over the years). In hindsight, risk management wasn't what it should have been (although, to be fair, Lehman was hardly alone in that), and although the firm has diversified over the years, it doesn't have the investment banking and asset management revenues of some of its major rivals. Always the outsider, Lehman never quite managed to find the inside track.

Now Glenn Schorr and Mike Carrier, two respected analysts at UBS, have come out with a note this week outlining the options available to Fuld, as he goes about the business of permanently fixing his firm. The two analysts wrote: 'We think Lehman has a handful of potential scenarios it is working on which could alleviate the current pressure, but as with most things in life, timing is critical'.

The scenarios the UBS guys have outlined are:

1. A sale of the whole firm (we consider this unlikely - except as a last resort - as Fuld has doggedly insisted that he wants Lehman to survive and thrive on its own).

2. Taking the firm private

3. The sale of between $30 - $40bn of risky assets at a discount of up to 30%, which could result in an $8bn after-tax reduction to Lehman's book value in a hypothetical sale.

4. The sale or IPO of asset management arm Neuberger Berman, which Lehman acquired 5 years ago for $3.1bn, and is now worth an estimated $8 - $10bn.

5. Entering into a strategic partnership with a very strong financial player.

6. Embarking on a meaningful share-buyback plan.

Schorr and Carrier, however, say that they 'feel the most likely scenario is the sale of a large block of risky assets, possibly in concert with the sale of Neuberger as a way to partially plug any hit to book value realized on the asset sale, (and) to possibly avoid another capital raise'.

And then what ? Well, we'll leave the final word on this subject to Corne Biemans, a senior portfolio manager at Fortis Investments, who is quoted by Bloomberg saying: 'They can survive thanks to the Fed's liquidity, and realign their businesses when things change. In every downturn, people think Wall Street's model is completely broken, and (that) it can't go on. Each time, Wall Street firms reinvent themselves. They'll come up with something again. I don't know what, but they will'.

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Sources - Bloomberg, Reuters, The New York Times, UBS research note.

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