The spin off of the commercial real estate is a huge deal. That
portfolio alone is worth 10 times the current value of LEH. You end up
with a share of LEH and a share of REI (The spin-off). Thats pretty
huge. This is how Mellon got through their crisis years back.

I agree as well, this company is TOTALLY under valued at the moment!

There is no clarity on what will get left behind, according to the
release the firm is left with "limited" exposure but on $32B
outstanding not sure what that number will be.

They just said they had a book value of $16, if capitalized.

These share prices were based on yesterdays theory that the company
was DONE. Today they showed they are well capitalized and have no
problems and a liquidity pool of $42, stock is going up guys.

Positive news coming out on the call - predicting bust out

Yep, and FNM and FRE were officially "well capitalized" as well until
the accounting tricks were discovered that seriously overstated their
value.

I was looking at the earnings release and I noticed it said their
"exposure was reduced from XX billion to xx billion"

Did anyone stop to think if perhaps this includes the fall in prices?
As in, do they have the same number of contracts and instead they are
worth 32 billion now instead of 38 billion? Is that how they may be
forming the term "less exposure" in that they actually have already
lost some and can only lose so much more now?

Does anyone know what happens to option contracts if the company is
split?

Well, the assets might be worth higher than current value of LEH but
you have to consider the obligations of this company. They have $640B
in Liabilities which might be growing and $614B in assets which might
have substantially reduced due to decline in stock markets from its
peaks and also consider the jam of those asset backed
securities....lol

All I am trying to say is that the Gap between Assets and Liabilities
might have substantially increased to a level which this asset sale +
current equity might not be able to equate. I am not saying that this
is the case, but this is a possibility that no one in the market is
ready to pick them. Think hard if you and me can think they are cheap,
wouldn't GS, Merrill Lynch, & other global institutions will think
they are cheap??? But since they are completely ignoring them, there
is an answer. It might be cheap but might be on the way to get
cheaper..... Dont try to catch a falling knife.

This might be the last desperate move by LEH and if this doesnt work,
then they are next Bear Stearns.

sorry I meant was $640B in assets and $613B in Liabilities, just
replace the number and comment remains the same.

im jumping in i hope i break even with this from fnm/fre fall out.

I hope you make your money back. But we prepared for an exit plan and
dont be too greedy...lol