Lehman staff anxious as firm struggles to survive

NEW YORK (Reuters) - Employees at Lehman Brothers arrived for work on Wednesday fearing the worst as the 158-year-old investment firm struggled for its survival.

Earlier, Lehman Brothers Holdings Inc outlined plans to sell a majority stake in its investment management unit and spin off commercial real estate assets and reported a record quarterly loss.

Many investors are doubtful about its future amid soaring losses on its mortgage and loan portfolio.

Lehman staffers entering its headquarters near Times Square lamented the 50 percent slide in the company's share price this week alone and hoped the investment bank would be spared the fate of Bear Stearns, which was sold to JPMorgan Chase & Co at fire-sale prices earlier this year.

Thousands of Bear Stearns employees -- more than one-half of the brokerage's work force -- have since been laid off.

Lehman said it has eliminated 1,500 jobs in the last few months, ending August with 25,935 employees.

One employee from Lehman's capital markets division said colleagues had already polished up their resumes, with some waiting to see how much of their annual bonus they could preserve before switching jobs.

The staffer declined to be named, as did others interviewed by Reuters.

"They are bailing out already," he said. "I'll wait today or tomorrow and make a decision based on the stock price."

Lehman decided earlier this year to pay its employees more stock and less cash in an effort to curb spending and hold on to talent, but shares have tumbled more than 60 percent in that time.

The staffer said that if Lehman cannot right itself, it would be better off selling the company as a whole than receiving some form of capital infusion.

Lehman was negotiating to sell a stake in itself to a state-run Korean bank, but the talks collapsed earlier this week.

"At this point, if someone gives us $6 billion, how is that going to be enough?" the staffer said.

In addition to fears over job security, employees holding Lehman shares or options are contending with a potentially large loss to their personal wealth.

Hany Besha, who operates a coffee truck outside Lehman's headquarters in New York, said: "One of my customers told me, 'I don't know if I will see you tomorrow or not.'"

ONE OF THE TOUGHEST TIMES

Lehman said Wednesday it posted a nearly $4 billion loss in the third quarter. Chief Executive Richard Fuld described it as "one of the toughest periods in the firm's history."

An employee from the trading floor, who joined Lehman three months ago after leaving Bear Stearns, appeared resigned to the latest shock hitting the financial industry after months of taking losses on subprime mortgages and a credit crisis.

But he thought the market had gone overboard in reacting to Lehman's troubles.

"There's no way anyone can tell me that Lehman is worthless," he said. "For me, it's all completely overdone. You don't normally expect any of this to happen. Who would have known that everything would collapse?"

Others said they are taking it one day at a time, particularly as thousands of job cuts at financial services firms meant there few job opportunities.

"So far I am okay with the situation," said another employee who declined to give her name. "It goes with the territory. I'm not upset or worried."

A colleague from Morgan Stanley's securities division across the street was sympathetic to his rivals' woes.

"It could happen to anyone," he said. "I hope Lehman stays afloat."

(Reporting by Aarthi Sivaraman; writing by Michele Gershberg; editing by Jeffrey Benkoe)