Lehman Brothers Holdings Inc., America's fourth-largest bank, may write down about $4 billion in credit-related investments and other assets when it reports fiscal third-quarter earnings, JPMorgan Chase & Co. analysts said.

It will be another difficult quarter for Lehman, analyst Kenneth Worthington said. Lehman continues to have significant exposure to mortgages and asset-backed securities, totaling $61 billion, he noted in the report co-authored with his JPMorgan colleagues.

Lehman, the largest underwriter of mortgage bonds before the sub-prime market collapsed, has slumped 77 per cent in New York trading as it struggles to pare its debt holdings. The bank has reported write-downs and credit losses of $8.2 billion in the past 12 months and has undergone a drastic shakedown of the senior management. (See: Financial crisis claims jobs of Lehman CFO and COO)

Worthington expects Lehman to post a third-quarter loss of $3.30 a share, versus his prior profit view of $0.35, and widened his 2008 loss view for the company to $6.77 a share from his prior loss estimate of $2.35 a share.

"While we view Lehman as well managed and nimble, deteriorating fixed income asset valuations and leveraged loans have led to downward earnings revisions," he said, while maintaining a ''neutral'' rating on the stock.

Worthington is not alone with his dire predictions. Analysts including Merrill Lynch's Guy Moszkowski, Deutsche Bank's Michael Mayo and Fox-Pitt's David Trone have also forecast a third-quarter loss at Lehman.

Moszkowski, in a note to clients on 28 July, said that Lehman wants to sell 20 per cent of its more than $60 billion of ''distressed'' assets in the third quarter. He expects the firm to post a $2.5 billion write-down on home loans in the quarter.

Lehman fell 63 cents, or 4.2 per cent, to $14.40 at 10:02 a.m. in New York Stock Exchange composite trading. They had closed at $15.03 yesterday. The stock is the worst performer this year in the 11-company Amex Securities Broker/Dealer Index.

''Lehman continues to have significant exposure to mortgages and asset backed securities,'' Worthington said in the report. ''We believe management wants to leave its mortgage troubles behind and restore confidence.''

The securities firm will probably retain its Neuberger Berman LLC asset-management unit, the JPMorgan analysts said. ''We don't think the ratings agencies would welcome this divestiture,'' they added.

The bank is in talks to sell parts of its investment management unit to potential bidders including private equity firms Carlyle Group, Hellman & Friedman LLC and General Atlantic LLC, the Wall Street Journal reported today. Experts estimate the business, whose core is Neuberger Berman, could be worth about $8 billion.

Neuberger has been a strong performer since Lehman bought it in 2003, but Lehman's big holdings of risky assets could expose it to outsize losses in coming quarters as house prices continue to fall, and Lehman has already raised capital three times this year. (See: Lehman Brothers may raise additional $5 billion in capital)

Like Merrill Lynch, which last month ended up doing a dilutive stock sale and selling its stake in financial services company Bloomberg after saying repeatedly it would do neither, Lehman could end up having to sell some of its best assets simply to raise cash. (See: Merrill Lynch to sell 20 per cent Bloomberg stake for $4.5 billion)

Lehman has sent them detailed financial information about its hedge funds, private clients, private equity and Neuberger Berman units, the newspaper said, citing people familiar with the matter that it didn't identify. The investment management unit is valued at $8 billion to $10 billion, the newspaper cited analysts as saying.