This should be enough to keep Lehman going. The upspin: in the months of December, January, and February, in the face of credit-market chaos, Lehman Brothers still managed to make a substantial profit of half a billion dollars, more or less. The leaner Lehman (the bank’s in the process of laying off a stunning 5,300 employees) looks like a fierce competitor, never mind a survivor. And there’s gold in them thar hills: Goldman made more than $1.5 billion in the same quarter.
The downspin: This is Lehman’s lowest profit number in five years, and it comes in the context of a stock-market atmosphere where it was crucial that the bank beat the Street’s official earnings expectations of 72 cents per share. That it did, but only by nine cents, which is the kind of margin that a CFO can normally engineer out of nothing, if she’s so inclined.
Ultimately, there’s nothing here to cause a run on the bank. Lehman’s strategy of "waging hand-to-hand combat," in the words of CFO Erin Callan, and quashing rumors at the trading-floor level rather than the CEO-press-release level, seems to have been a smart one. "I don’t believe your boss" is always easier to say than "I don’t believe you". Between that and the Fed’s new liquidity facility, I’m calling for Lehman to survive this crisis. And that which doesn’t kill Lehman brothers, as we saw in 1998, has a tendency to make it stronger.