1) Battered Lehman to announce 'key' initiatives
The nation's 4th-largest securities firm, whose shares fell nearly 50% on Tuesday to a decade low, is said to be ironing out a deal to sell or spin-off its prized investment management business. Lehman is also looking to raise cash through the sale of devalued mortgage assets.
The deals are aimed to provide Lehman with new infusion of capital to offset a multibillion loss expected to be taken during Q3. The company will provide details about its performance during the quarter a week ahead of when it originally planned to release results.
The unusual steps come after speculation that negotiations with KDB broke down, causing shares of Lehman to plunge 45% to US$7.79.
The sell-off stoked a sense of urgency that Lehman must demonstrate to Wall Street that it has enough liquidity to survive a year-old credit crisis that has cost it US$8.2bn in write-downs and credit losses. Analysts believe Lehman will lose between US$2bn and US$4bn during the Q3 as it contends with US$70bn of troubled real estate assets.
Wall Street remains skittish about financial stocks since the near-collapse of Bear Stearns. Like other investment banks, Lehman has been hit hard by deterioration in the credit and mortgage markets since the mid 07. Global banks have so far lost more than US$300bn from MBS and other risky investments.
The announcement on Wednesday could help convince investors that Lehman CEO Richard Fuld is handling the crisis, and will right its damaged B/S, analysts said. He took responsibility for a US$2.8bn Q2 loss, which was the first since Lehman spun off from American Express in 94.
Lehman has approached a broad range of possible investors, including banks in Korea and Japan. PE firms in the US have also been contacted about investing in a spin-off of the firm's investment-management business, which includes Neuberger Berman.
Analysts believe it could fetch up to US$10bn, or that Lehman might spin-off half of the business to an outside investor much like how Merrill Lynch owns a 49% stake in BlackRock.

2) Wall Street ends lower on concerns over Lehman
Stocks tumbled Tuesday, nearly erasing the previous session's big gains, after fresh concerns about the stability of Lehman punctured a sense of optimism about the financial sector.
Wall Street's pullback came one day after the biggest single-session rally in a month in the Dow. Investors had been hopeful about the sector after the Treasury announced Sunday it would seize control of Fannie Mae and Freddie Mac in an effort to help stabilize the troubled housing market.
Investors had been worried that the companies, which hold or back about half the nation's mortgage debt, would succumb to a spike in bad loans. But worries over the fate of Lehman rattled investors, and sent their shares down nearly 50%, with the KDB investment now in doubt.
The Dow fell 280.01, or 2.43%, to 11,230.73.
Fannie Mae jumped 26c, or 35.6%, to 99c, while Freddie Mac closed at 88c, unchanged.
Among financial names, Citi fell $1.44 (7.1%) to $18.88, and Morgan Stanley fell $2.87 (6.6%) to $40.40. Merrill Lynch declined $2.83 (10.3%) to $24.76. AIG tumbled $4.39 (19.3%) to $18.37, after hitting a new 52-week low of $18.28 earlier in the session.

3) Oil down as Ike shifts course, OPEC mulls output
Oil prices closed below US$104/barrel Tuesday for the first time since early April as traders bet that Hurricane Ike would miss critical Gulf Coast oil installations, supported by the OPEC president’s signal that the cartel wouldn't cut production.
Ike roared ashore south of the Cuban capital of Havana early Tuesday after shifting course overnight on a track that could hit anywhere from northern Mexico to Corpus Christi, Texas -- well south of major oil and natural gas installations in the Gulf of Mexico. The storm also weakened Monday from a Category 3 storm to a Category 1.
On the other hand, OPEC oil ministers will likely decide to keep output at present levels, the group's president said Tuesday, as OPEC President Chakib Khelil suggested most members would rather accept lower-priced crude than see a broader destruction of demand that has occurred over the last several months as oil set one price record after another.
Ministers of the 13-nation organization are expected to make a formal decision late in the day or early Wednesday on what to do about production amid rapidly falling prices.
Oil prices closed below $104 a barrel Tuesday, a 30 percent decline from July.
Amid such expectations, crude prices dipped to $103.26 per barrel on the New York Mercantile Exchange, the lowest settlement price since April 1. Prices dipped as low as $102.20 Tuesday. In aftermarket trading Tuesday, prices tumbled more than $4 a barrel to a new five-month low of $101.74.

4) Apple unveils new iPods but shares slip
Apple CEO Steve Jobs took the wraps off a revamped line of iPods on Tuesday and trumpeted a truce with NBC allowing the TV network to begin selling programs again on iTunes.
The iPod announcements were largely expected, and investors were less than energized, sending Apple's shares down $6.24 (4%) to $151.68.
The iPod upgrades Jobs revealed Tuesday in a theater in San Francisco include two slick new Nano models, oval-shaped devices that Jobs said are the thinnest iPods Apple has ever made. They are less than a quarter-inch thick. These will be priced at US$149 for the 8GB version and US$199 for the 16GB version.
The new models acknowledge the incredible appetite for iPods -- Jobs said Apple has sold 160 million iPods since their introduction in 2001, making them the runaway leader among portable music players. But Apple has to work hard to differentiate them from the iPhone, Apple's cell phone/iPod/Internet device that threatens to cannibalize some of the demand for iPods.
Jobs also showed off three new versions of the iPod Touch, which is much like an iPhone except that doesn't make calls. An 8GB version of the new model will sell for $229; a 16GB Touch will be $299 and a 32 GB model will be $399.
Jobs also introduced a new "genius" feature in iTunes and the iPod's onboard software. If a user clicks the genius button while listening to a song, the program automatically creates a new playlist of similar songs from the user's own library. The software determines similarity in part by analyzing which songs other people have together in their libraries.

4) Billions to be shared by Enron shareholders
Enron shareholders and investors will split a settlement amount of US$7.2bn (including accrued interest and attorney’s fees) from financial institutions accused of participating in the fraud that caused the once-mighty energy company to collapse. About 1.5 million individuals and entities will be eligible to share in the distribution under the settlement plan.

5) Pending home sales fall 3.2%
The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell 3.2%to a reading of 86.5 from an upwardly revised June reading of 89.4. The index was 6.8% below SPLY.
Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 88.6. The index, which sunk to a record low of 83 in March, stood at 92.2 in July 2007.
Many in the real estate industry are hopeful that these standards will be relaxed with Fannie and Freddie under government control, but the outlook remains uncertain.

Tags: apple, crude oil, dow, enron, fannie mae, finance, freddie mac, home sales, ike, lehman, opec