The number was not good: profits fell 12 percent, led by poor fixed-income results. But the analysts had apparently been talked down enough that the results beat expectations. Still, Mr. Market is savvy enough to know that there are lots of question marks out there. Chief among them is level-three assets. Lehman says about 13 percent of its inventory will be classified as such, up from 10 percent the previous quarter. That would suggest some negative valuation adjustments in the coming quarters. Also it looks like the credit crunch has spread to non-subprime securities, like commercial real estate. For now, all eyes shift to Goldman Sachs and Morgan Stanley, both of whom report next week.  

For more:
- here's the Dow Jones article
- here's Meredith Whitney's reaction video

Related article:
- 4Q Earnings on Tap

Read more on: Lehman Brothers