Lehman Brothers

Lehman Brothers, which filed for bankruptcy Sunday to became the largest casualty of the global credit crisis, is in advanced talks to sell its investment management business, including the crown jewel, Neuberger Berman.

Lehman [LEH 0.225 0.0875 (+63.64%) ] is the biggest investment bank to collapse since 1990, when Drexel Burnham Lambert filed for bankruptcy amid a collapse in the junk bond market. Based on assets, Lehman also far surpasses WorldCom as the largest U.S. bankruptcy ever.

Lehman had assets of $639 billion at the end of May, while WorldCom had $107 billion when it filed for bankruptcy protection in 2002.

The Chapter 11 filing did not include Lehman's broker-dealer operations and other units, such as asset management firm Neuberger Berman.

Those businesses will continue to operate, although Lehman is expected to liquidate them.

Time is of the essence as Lehman sells assets.

Customers are often reluctant to trade with dealers whose parent companies are in bankruptcy, so the longer Lehman waits to sell its broker-dealer unit, for example, the less that unit will be worth.

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"Much of (Lehman's) asset value at the end of the day is tied up in its credibility, and that takes a significant hit early in a bankruptcy case," said Jack Williams, resident scholar at the American Bankruptcy Institute and a professor at Georgia State College of Law.

The bankruptcy filing represents the end of a 158-year-old company that survived world wars, the Asian financial crisis and the collapse of hedge fund Long-Term Capital Management, but not the global credit crunch.

Financial institutions globally have recorded more than $500 billion of write-downs and credit losses as the U.S. subprime mortgage crisis has spread to other markets.



Bankruptcy also represents a bad end to Chief Executive Dick Fuld's four-decade career at Lehman. Fuld, who piloted the investment bank through prior crises with aplomb, was widely seen as too slow to recognize Lehman's need to raise capital and shed bad assets.

At the end of August, Lehman had $600 billion of assets financed with just $30 billion of equity.

Having so little capital meant that a 5 percent decline in assets would wipe out the value of the company, which investors saw as a real risk due to the company's billions of dollars of mortgage securities.

"Lehman decided to play chicken with the market and they lost," James Ellman, portfolio manager at hedge fund Seacliff Capital, said late on Sunday.

In its Chapter 11 filing, Lehman named Citibank and Bank of New York Mellon as trustees for about $138 billion of senior Lehman bonds. It said Citi's Hong Kong affiliate had made a $275 million bank loan to Lehman.

Among Lehman's other unsecured creditors are Japanese banks Aozora Bank, Mizuho Financial Group Inc, Shinsei Bank and UFJ Bank.

France's BNP Paribas is also on Lehman's list of its 30 largest unsecured creditors.

The firm said that as of May 31, it owed about $110.5 billion on account of senior unsecured notes, $12.6 billion on account of subordinated unsecured notes, and $5 billion on account of junior subordinated notes.

Lehman also disclosed that it owned stakes of 10 percent or more in a number of companies, including Imperial Sugar Co , Lpath Inc, Derma Services, Flagstone Reinsurance, GLG Partners, Ronco Corp , Pacific Energy Partners, Blount International , Pemstar Inc and Transmontaigne Inc.

The investment bank, once the fourth-largest in the United States, had hoped to raise capital by selling off a stake in its investment unit, and use that capital as well as other funds to spin off some of its toxic assets to shareholders.

But that plan did not satisfy investors, who punished Lehman's share price, or rating agencies, who pressed the company to find a stronger partner.

Lehman said the uncertainty, particularly among banks through which it clears securities trades, ultimately made it impossible for it to continue to operate its business.
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The bankruptcy filing comes after a weekend of heated negotiations among regulators and Wall Street firms about Lehman's fate.

The U.S. government refused to backstop Lehman's worst assets the way it backstopped Bear Stearns Cos Inc's sale to JPMorgan Chase.

Government officials told banks to support Lehman or else be prepared for more investment banks to lose investor confidence and fail.

But prospective bidders refused to buy Lehman without government support, people briefed on the matter said.

In the end, Lehman was allowed to fail, and Bank of America Corp agreed to buy what was seen as the next weakest U.S. investment bank, Merrill Lynch & Co Inc.

For many of Lehman's 26,000 employees the outlook is likely to be gloomy, with job losses expected to be substantial even if significant parts of the business can be sold.

At Lehman's headquarters in midtown Manhattan on Sunday afternoon, men dressed in suits came and went, while some employees entered the building with what appeared to be empty duffel bags, then left with them full.

Others emerged with accordion files, binders stuffed with papers and full valises.

On Sunday night, hundreds of Lehman employees were still in the office to clear their desks and pack personal belongings, according to an employee.

Many opted to say their farewells with one last office soiree. "We are having pizza and beer," the employee said.

"I guess times are tough and we've got to face the music," said a Lehman banker in London. "Everyone is worried about their job -- it's inevitable."

Markets are likely to be wary of what is ahead. Bankruptcy is a long, complex process where almost everything is done out in the open, as opposed to the veil of secrecy Wall Street uses to conduct deals.

"This isn't a manufacturer or retailer...so we don't have a very rich track record about how the issues will be addressed, and the classic signposts just aren't there," the American Bankruptcy Institute's Williams said. "Once the company goes into bankruptcy, this is going to be an opportunity to look under the hood, and we might not like what we see." (from http://www.cnbc.com/id/26708143)

Dell Inspiron Mini 9 Available Now: Windows XP $399, Ubuntu $349

The way Dell introduced the Inspiron Mini 9 was pretty inspired, so it's almost been depressing watching the steady stream of leaks deflate it into a now familiar device, even though it's only being released today. As leaked, inside is an Intel Atom Diamondville processor and it has a 1024x600 LED-backlit screen with 4, 8 and 16GB SSD options (plus you get 2GB free online storage at Box.Net) and about three hours of battery life. Only the Windows XP version is available now for $399, in black or white—the $349 Ubuntu flavor, along with the rest of the six-color rainbow are a few weeks away.

MEET YOUR NEW BEST FRIEND: DELL’S INSPIRON MINI 9

Ideal Internet Buddy For Surfing, Shopping and Chatting

·Light, Highly Mobile Device Built For Easy Online Browsing And Entertainment

·Box.net Web Storage Keeps Your Personal Files Safe And Enables Anytime Access and SharingROUND ROCK, Texas, Sept. 4, 2008 –Dell today officially unveiled the Inspiron Mini 9. This small, easy-to-carry device stands ready to connect teens, tweens, travelers and “Tweeters” to their online world be it surfing the Web, chatting with friends, blogging, streaming content, uploading photos or enjoying favorite online videos, music and games.

The Inspiron Mini is an affordable Internet companion that can be fine-tuned to fit users’ specific needs and deeds. It is available now on www.dell.com/mini in the U.S., Japan and select countries in Europe. Availability elsewhere will be handled on a country -by-country basis.

Solid Construction & Connections

With a starting weight of 2.28 lbs.[i], digital nomads will value the Inspiron Mini’s durable design, with sealed keyboard and reliable solid state drive (SSD) memory storage. A bright 8.9‑inch glossy LED display (1024x600) presents most web pages with no left-right scrolling, and the keypads are large and easy to navigate. Standard built-in Wi-Fi means quick and easy wireless internet access to hotspots in the home, on campus, in a local coffee shop, in the office or at a conference. The Inspiron Mini can be further customized with optional technology like:

· Built-in Webcam, bundled with Dell Video Chat, making it easy to stay in touch using video chat, recording and sending video emails, or even PC-to-PC phone calls around the world. DVC even supports four-way calling, making virtual family reunions a reality.

· Built-in Bluetooth® for easy wireless connections to Bluetooth-enabled accessories like a pair of stereo headphones, a mouse, a printer, etc.

Dell has teamed up with Box.net to offer exclusive web-based file storage, access and sharing to Inspiron Mini users, including a free Basic plan with 2GB of remote storage space, expandable to 25GB. Dell’s Inspiron Mini will include a direct link to a Dell-exclusive home page on Box.net (www.box.net/dell), providing users with an easy way to add incremental online storage space to easily manage their digital lives. Individuals can safely and securely upload files of any type to their Box, including photos, videos, music, documents and presentations, and then access those files from almost anywhere on any device.

Box.net’s world-class service requires no software to download. With its OpenBox platform, Box.net enables people to edit documents and photos directly from their web-browser and post media to their blog or social networks, further enhancing the mobility and user experience on the Inspiron Mini.

Individual & Intuitive, Simple & Stylish

Individuals can personalize their Inspiron Mini with choice of colors – Obsidian Black or Alpine White – and interaction experience – optional Windows® XP® or Ubuntu 8.04 with custom Dell interface (coming soon). For those looking for a more traditional and familiar experience, the Inspiron Mini with Windows XP Home is available immediately starting at $399.

Inspiron Mini devices featuring an intuitive Dell-developed custom interface are expected to be available in a few weeks with a starting price of $349. The custom home screen is designed to make it easy to find what people are looking for. Intuitive icons link directly to groups of similar applications, like games, Web and entertainment, and favorite web links for quick access. Plus, the home screen can be personalized, putting your favorites front and center.

This highly mobile and fun device can be carried anywhere in style thanks to a full line of custom “Designed for Dell” backpacks, messenger bags and convertible cases from merchants including Timbuk2. Blending high fashion and superior function, the coordinated bags and accessories incorporate subtle design elements and offer Inspiron Mini owners a unique way to express a personalized, integrated style. “Designed for Dell” products currently are available in the United States, Canada and Europe.

Finishing Touches

Dell provides a variety of service offerings and add-on options to help ensure devices are easy to use and maintain optimal performance, including:

· Dell Support Center: Quickly access Dell service and support from an icon on your desktop that provides automated fixes, software upgrades and tools to help keep your system up-to-date and running efficiently.

· DellConnect™ Remote Assistance:[ii] Dell experts help diagnose and solve PC problems via an Internet connection (available only on Windows-based systems)."

Eee PC 1000H Price Drops Even Lower; $450 on Amazon, $360 on MWave

In case Asus' $100 price drop in July just wasn't enough to make up your mind on whether to spring for a new Eee PC 1000H, the mini-marvel's gotten even cheaper now. Amazon is selling an 80GB, XP-equipped 1000H for just $450. Mwave also has several in stock for either $450 (while supplies last) or, if you're willing to go for an open box product, an almost criminal $359. [gizmodo from amazon and mwave via Liliputing]