Lehman Sinks on Writedown Fears

Lehman Brothers(LEH Quote) shares were hit hard Tuesday on concerns about potential major writedowns on the investment bank's mortgage holdings and a slowdown in the fixed-income markets, where Lehman has a significant book of business.

Lehman stock tumbled 9.5% to $13.61 in recent trading. Its shares have taken a tumultuous ride over the past year, from a high of $67.73 last winter to a low of $12.02 in mid-July amid concern that mounting losses might leave Lehman insolvent.

In a client note on Tuesday, JPMorgan analyst Kenneth Worthington cut his earnings estimates for Lehman through 2009, saying he expects the beleaguered bank to take $4 billion worth of writedowns for the third quarter alone. He cited further deterioration in the housing and mortgage markets, as well as a tough credit environment and a slowdown in fixed-income trading volumes. ...