Investment Banks

Shares of investment banks fell in early Thursday trading after Lehman Brothers analyst Roger Freeman said banks are likely to face widening losses on asset write-downs.

Bear Stearns Cos. shares fell the furthest, declining $7.30, or 12.1 percent, to $54.28, after earlier hitting $52.43, their lowest point since the fall of 2002.

Freeman said any gains Bear Stearns would have received from wider spreads would be offset by write-downs on alt-A mortgage assets. Alt-A mortgages are loans given to customers with minor credit problems or who do not have the documentation to get a traditional, prime loan.

Freeman estimates Bear Stearns will earn 90 cents per share for the quarter ending Feb. 29.

Bear Stearns book value per share was $84.85 at the end of the quarter, Freeman estimated.

Bear Stearns is likely to lose $50 million in its merchant banking division and reduce the value of its alt-A exposure by about 8 percent during the quarter, Freeman wrote in a research note.

Among other investment banks with quarters ending Feb. 29, Freeman estimated Goldman Sachs Group Inc. earnings will likely be hurt by high losses in its investment portfolio. Freeman lowered his first-quarter earnings estimate for Goldman Sachs to $1.95 per share from $2.10 per share.
Shares of Goldman Sachs fell $3
.50, or 2.2 percent, to $159.51.

Morgan Stanley will also be negatively affected by asset write-downs and investment losses, which could be partially offset by some gains in structured debt, Freeman said.
Shares of Morgan Stanley fell 82 cents, or 2 percent, to $40.19.