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Lehman tops 3Q target
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September 25, 2001: 11:27 a.m. ET
Profit, revenue at brokerage house both fall but results still beat forecasts
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NEW YORK (CNNfn) - Brokerage house Lehman Brothers Holdings Inc. reported a sharp drop in fiscal third-quarter profit Tuesday but it still topped Wall Street forecasts for the period.
The company also said it sees no real change in expenses due to the Sept. 11 terrorist attack that destroyed the World Trade Center.
The company has been displaced from its headquarters in the World Financial Center, which had been across the street from the trade center before attack.
Chief Financial Officer David Goldfarb told analysts during a conference call Tuesday that the company anticipates most of its losses in the attack to be covered by insurance.
Lehman does not know when it will return to the World Financial Center, but its long-term goal is to resume operations at the complex, Goldfarb said.
Earlier, Lehman earned $309 million, or $1.14 a share, in the quarter ended Aug. 31, down nearly a third from $457 million, or $1.68 a share, a year earlier. Analysts surveyed by earnings tracker First Call expected earnings per share to fall to $1.08.
The company said it was hurt by a sharp downturn in mergers and acquisitions during the period as well as a weakness in global equity markets. But it said it saw record revenue from bond sales and trading.
Net revenue, which reflects revenue less interest expense, fell 21 percent to $1.6 billion from $2.1 billion a year earlier, but topped First Call's forecast of $1.57 billion.
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Shares of Lehman (LEH: Research, Estimates) moved higher in early trading Tuesday.
Merrill Lynch analyst Judah Kraushaar said in a research note Tuesday that he is bracing for a difficult fourth quarter for Lehman, but remains guardedly optimistic of a rebound in 2002.
"Assuming Lehman can successfully stage a profit rebound in early 2002, we believe the shares will prove to be an excellent value at this point, and we continue to see strong franchise value given the scarcity value of solid investment banking franchises," Kraushaar said. 
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Lehman Brothers
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