THE BUSINESSWEEK 50 RANKINGS + 25

23

Lehman Brothers Holdings

Lehman Brothers, the investment bank once known for its bond trading and internal warfare, is grabbing share in mergers advice and rapidly expanding its global reach. The new House of Lehman has deftly taken advantage of the huge demand for fixed-income securities from companies and traders, rolling out everything from securitized Japanese residential mortgages to student loans while beefing up its stable of bonds. At the same time, it’s hiring more bankers to gather strength for a deal offensive. The strategy is working. Lehman is a co-investor in the largest buyout ever, the bid for TXU, and was an underwriter for the first IPO of a hedge fund, Fortress Investment Group. Now CEO Richard Fuld wants to keep ramping up Lehman’s investment management business, buying stakes in hedge funds like D.E. Shaw. He’s also sharpening the firm’s investment banking prowess overseas.

Overall Grade

A

Market Data

LEH

Market Value
(2/28/2007)

$39.1 Billion

Profitability*

28.9%

B+

Sales Growth Rate**

40.6%

A

12-Month Sales

$46.7 Billion

12-Month Net Income

$4.0 Billion

Total Return Past 12 Months

1.2%

Past 36 Months

73.0%

Economic SectorFinancials
IndustryInvestment Banking & Brokerage
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.
$FOOTNOTE

Richard S. Fuld Jr.

Richard S. Fuld Jr., 60

CEO since 1993


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Data as of 2/28/07 provided by Standard & Poor's Compustat