Lehman Brothers Holdings' chief executive expressed confidence in the investment bank last night, ending its shares up as much as 9 per cent, even as it posted its first quarterly loss as a public company.
CEO Dick Fuld said the company's franchise and capital position are strong as Lehman posted a $2.8 billion loss, in line with its forecast last week.
"We've made a number of changes. It's now my job to make sure that we execute," Fuld said on a conference call with investors.
The 62-year-old executive has been with Lehman since 1969 and has been CEO since 1993. He has been largely absent from public view during the recent weeks' turmoil at the bank, but told investors on Monday the quarterly loss "is my responsibility."
Lehman's shares have not recouped all of last week's declines, when the company forecast the quarterly loss and demoted its chief financial officer and chief operating officer amid a crisis in confidence.
The shares, up $1.39 to close at $27.20 yesterday, are still below their book value, or net accounting value, of $32.95. Lehman's relatively low share price implies investors see more write-downs coming for the fourth-largest US investment bank, which recorded $3.7 billion of write-downs for the second quarter.
"That's the $64,000 question for all the brokers: What is their actual book value?" said Jeff Harte, analyst at Sandler O'Neill in Chicago. "That's definitely what people are concerned about."
Lehman, for its part, sees its current valuations as reasonable.
"We feel very good about where our balance sheet is marked, but we clearly have to convince the marketplace that that is the case," Chief Financial Officer Ian Lowitt said in an interview.
Mr Lowitt was named CFO last week.
Lehman has more than $60 billion of mortgages and asset- backed securities on its books, an amount well in excess of the company's net worth. Some analysts project further write-downs for those assets.
Lehman said its loss amounted to $5.14 a share for the fiscal second quarter ended May 31, compared with net income of $1.27 billion, or $2.21 a share, a year earlier.
The loss was Lehman's first since it was spun off from American Express Co in 1994. Although write-downs have triggered big quarterly losses at rivals such as Morgan Stanley, Lehman had managed to avoid posting a net loss until yesterday.