Lehman Eyeing $4 Billion Capital Raise

Updated from 2:51 p.m. EDT

Lehman Brothers(LEH) is mulling a plan to raise as much as $4 billion as the firm sets to report its first quarterly loss in its history, The Wall Street Journal reported Tuesday.

Lehman thus far has been regarded as one of the few investment banks to navigate the credit crisis without major damage, as it posted an 81-cent-a-share profit in the first quarter. Wall Street's outlook for the firm, however, has been dimming in recent months as continuing concerns about the residential mortgage market and construction loans mount.

Analysts expect a profit of 7 cents a share on revenue of $2.89 billion, according to a Thompson Reuters poll. The Journal, however, said the firm could lose more than $300 million.

The paper said the exact size of Lehman's expected capital raising was not known, but sources said it could be between $3 billion and $4 billion. The plan would likely be announced when the firm posts second-quarter results next month.

Lehman shares closed down 9.4% to $30.66 Tuesday.

Lehman shares have taken a beating in recent weeks. On Monday, the stock fell 7.5% to $33.83 after Standard & Poor's downgraded Lehman, along with Morgan Stanley(MS) and Merrill Lynch(MER).

S&P also lowered outlooks on Bank of America(BAC) and JPMorgan Chase(JPM) to negative.

Noted analysts Richard Bove of Ladenburg Thalman and Meredith Whitney of Oppenheimer also cut their forecasts for the firm and other brokerages last month.

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