Updated from 8:45 a.m.
The Wall Street money machine keeps roaring along with
both posting strong fourth-quarter results.
Earnings at Bear Stearns rose 38%, while Lehman's profit was up 22% in the quarter ended Nov. 30.
But their results pale in comparison to the 93% surge in fourth-quarter profit reported by
earlier in the week, which beat expectations by a wide margin. Bear Stearns and Lehman also surpassed Wall Street estimates but by significantly lesser margins.
In the quarter, Bear Stearns earned $563 million, or $4 a share, compared to earnings of $407 million, or $2.90 a share, in the year-ago period. Net revenue rose 28% to $2.41 billion.
The Thomson Financial forecast had Bear Stearns earning $3.36 a share on revenue of $2.2 billion.
Lehman, meanwhile, earned $1 billion, or $1.72 a share, up from $823 million, or $1.38 a share. Net revenue rose 23%, to $4.5 billion.
Analysts were forecasting earnings of $1.68 cents a share on revenue of $4.41 billion.
In the earnings competition between Bear Stearns and Lehman, the former was the clear winner. Indeed, Bear Stearns even boasted a bit in its earnings release, calling the quarter its "best ever.''
Bear Stearns posted a 58% gain in net revenue gain from investment banking work, which totaled $364 million. The firm also profited from the success of its bond-related businesses, which recorded a 19% gain in revenue to just over $1 billion. The firm says its bond businesses were boosted by strong demand for mortgage securitizations, credit derivatives, distressed debt and leveraged financing to fund private-equity buyouts.
Lehman, meanwhile, was a bit disappointing on the investment banking front. Revenue from investment banking work in the quarter rose a meager 5% from a year earlier, to $858 million. Despite a worldwide surge in corporate deal-making, Lehman said fees from advising on corporate deals fell 7.2% to $256 million.
Lehman, however, did post a 28% gain in capital markets revenue, which totaled $3.03 billion. Much of that came from its bond-related businesses, one of its strong suits. But capital market revenue rose just 7% from the third quarter of this year.
In light of the differing results, were rewarding Bear Stearns much more than Lehman. In early afternoon trading shares of Bear Stearns were up $3.39, or 2%, to $159.28, while Lehman's shares were up 11 cents to $74.48. Lehman's stock recovered after trading down by $1 during the morning hours.
Shares of Goldman Sachs fell after the firm announced earnings on Tuesday, as investors no doubt took some profits -- the stock is up about 55% for the year. Investors also fretted a bit over signs of sequential weakness in the firm's investment banking and asset management revenue. Goldman Sachs' numbers also got a big boost from a one-time private-equity gain, most of which was a $900 million gain on a Chinese bank IPO.
Overall, it's been a stellar year for Wall Street, with investment firms reporting record profits and shares of brokerage stocks outperforming the broader market. The earnings announcements come as investment firms are poised to hand out huge bonuses to bankers and traders, with Goldman Sachs doling out an average bonus of more than $600,000.
Top performers at Goldman Sachs, Bear Stearns and Lehman are looking at seven-figure bonuses.