Lehman Brothers Net Rises 47%

Updated from 8:23 a.m. EDT

Lehman's(LEH) second-quarter earnings rose 47% from a year ago, topping estimates on across-the-board revenue growth in investment banking, trading and asset management.

Lehman earned $1 billion, or $1.69 a share, in the quarter, compared with $683 million, or $1.13 a share, a year ago. Second-quarter revenue rose 35% to $4.4 billion. On average, analysts were forecasting earnings of $1.61 a share on revenue of $4.2 billion in the most recent quarter.

The company's biggest unit, capital markets, where Lehman makes markets, structures derivatives and provides brokerage services to institutional clients, had revenue of $3.1 billion in the quarter, up 38% from a year ago. Revenue on the unit's equity side rose 85% to $878 million, while revenue in fixed income rose 25% to $2.2 billion.

Equity capital markets "were driven by higher trading volumes in the cash businesses and improved results in the global derivatives and prime brokerage businesses," the company said. Debt capital markets had "strong results across all products, including credit, municipals, real estate, mortgages and interest rate products."

In investment banking, revenue rose 28% to $741 million, while revenue in investment management rose 25% to $472 million. Investment banking results "were driven by strong advisory and equity underwriting revenues, partially offset by a decline in debt underwriting."

Lehman's earnings beat analysts' expectations for the second quarter in a row. But Wall Street wasn't impressed. While the earnings were strong, concerns have set in that the economy is about to take a turn for the worse.

Lehman shares fell $3.29, or 5%, to $62.32, dragging down other brokers. Goldman Sachs(GS) was falling $2.36, or 1.6% to $147.53; Morgan Stanley(MS) was falling 76 cents, or 1.3%, to $58.43; and Merrill Lynch(MER) was down $1.85, or 2.6%, to $69.22.

While Lehman's earnings were good, the market, as is always the case, was more interested in its future prospects.