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Updated from 9:29 a.m. EST

Lehman Brothers

( LEH) reported fourth-quarter earnings Thursday that were 15% higher than expected by analysts. Investors welcomed the results and rode the stock up 3, or 4%, to 72 15/16. (Lehman settled Thursday up 2 15/16, or 4%, to 72 7/8.)

Net income for the quarter ended Nov. 30 jumped 307% to $301 million, or $2.28 per share, from $74 million in the year-earlier period.

Analysts surveyed by

First Call/Thomson Financial

expected $1.97 per share for the quarter.

Revenues for the investment banking firm's fourth quarter rose 112%, to $1.4 billion, from $665 million in the same quarter last year.

"It was certainly a strong quarter," said Joan Solotar, an analyst with

Donaldson Lufkin & Jenrette

who rates the stock a buy. "Investment banking was in line, the differential with trading revenues were meaningfully higher than we expected." Merger and acquisition activity was softer, Solotar said, after having scored a major coup by orchestrating


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. Her firm has done no underwriting for Lehman Brothers.

The New York-based firm attributed its success to diversification of its business mix, global expansion and effective management of expenses and risk, according to a Lehman statement Thursday.

For the full fiscal year, Lehman Brothers said it had achieved record results in its investment banking and capital business markets that include equities, fixed-income and high-net-worth retail segments.

Net income for the fiscal year surged 54%, to $1.13 billion, compared with $736 million the year before. Earnings rose 57% to $8.15, over last year's earnings of $5.19 per share.

Revenues for fiscal 1999 were $5.3 billion, up 30% from $4.1 billion in 1998.

Richard Fuld Jr., chairman and chief executive noted how far the firm has come since becoming a publicly traded company five years ago. Fuld Jr. said, "Our earnings in 1999 represent a tenfold increase from our first year's net income level."

Solotar said that she was bullish on investment banking and Lehman for next year but noted that they're still tier two in underwriting behind

Goldman Sachs


Morgan Stanley Dean Witter

. "Their goal is to build a big cap presence, but it's not that easy."