Lehman to lay off 1,500

Lehman to lay off 1,500
The troubled investment bank's plans to shed up to 6% of its workforce amid a slumping stock price, concerns about its future.

NEW YORK (Fortune) -- Lehman Brothers, the once high-flying investment bank hit hard by the real estate crisis, is planning to lay off 1,500 workers, a source within the company confirmed Thursday.

The layoffs, which were first reported on the New York Times' Web site, represent about 6% of Lehman's workforce and are expected to take effect prior to the company's third-quarter earnings report, due Sept. 15.

A Lehman spokesman declined comment.

News of the pink slips serves as a cruel reminder of what happens when a company's main business lines collapse at the same time.

Lehman has been wracked by troubles resulting from its longtime effort to dominate the commercial and residential real estate markets in North America. Other business units, including its advisory work, have also slumped as the kinds of deals that are Wall Street's bread and butter have come to a halt.

Lehman's (LEH, Fortune 500) stock is down almost 80% this year as its prospects continue to dim. Shares were up nearly 5% in trading Thursday.

The layoffs come amid unprecedented moves by Lehman to shore up its balance sheet. These efforts include the sale of up to $40 billion in commercial real estate loans and securities - which appear to be declining in value on weekly basis - as well as the sale of a stake in its highly profitable Neuberger Berman money management unit.

While both the sale of the mortgage investments and a Neuberger stake have been pursued for weeks, Lehman so far has been unable to reach a deal. The company has also been unable to secure a major equity investment.

First Published: August 28, 2008: 2:40 PM EDT

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