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Early next week, the Lehman Brothers Holdings Inc. may raise up to $5 billion in capital. The company, which is the fourth-largest securities firm in the United States, from the time it went public in 1994, may yet report its first ever quarterly loss, according to a company insider.

There is an overseas investor and one US pension fund, at the very least, that Lehman executives are talking with as regards the terms of a transaction. However, a rights offering, wherein existing stockholders can have the right to buy discounted shares, is not part of the present plan.

This year, Lehman plunged by 48 percent in New York Stock Exchange as the company deals with problems regarding the decline of the mortgage as well as structured credit business.

Amid low real estate-backed debt securities and high-yield loans demands. The securities firm is doing its utmost to minimize leverage, or the assets versus shareholder equity ratio

In April, Lehman was able to come up with $4 billion from a sale of convertible preferred shares. This was done to weed out speculation that the company was dire need of capital. By issuing subordinated bonds and some other kinds of securities, the securities company, all in all, was able to raise $8 billion.

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Royal Ahold NV, which is based in Amsterdam, realized an unexpected profit during the first quarter as it raised operating margin target for the full year following a Dutch chain’s sale, according to owner of Albert Heijn.

The company realized an 8.9 percent in net income that translates to 258 million euros or approximately US$402 million, which further translates to 22 cents per share, from the previous year’s 237 million euros, or 15 cents, the company said, as it exceeds the 224 million-euro median expert estimates.

The company during the past has spent as much as $19 billion on takeovers. However, this activity came to an abrupt stop when Ahold, in 2003, got involved in an accounting scandal. Currently the company has sold assets in order lift company earnings, as it puts more effort on retailing.

The profit realized by the company soared as this giant grocery chain enticed its customers its prepared meals, helping counteract declining US earnings, where the company busied itself with its price-cutting spree in order to compete with another entity called Supervalu Inc.’s Shaw’s chain despite the turbulent economic conditions.

Petercam analyst Fernand de Boer, in Amsterdam, who gave Ahold a “buy” rating on company stock said “[i]t’s positive that Ahold raised its margin target even though the situation in the U.S. is getting tougher.”

Amid investors’ opposition, France Telecom SA has made an offer to buy TeliaSonera AB. The said offer was for 252.5 billion kronor or approximately US$42 billion. The reason investors are opposed to this deal is that it would simply erode value.

During the previous month, approximately 9 out of 10 investors were openly against the deal between these two telecommunications companies as they could not see any real advantage to the merger, whether financial or strategic.

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TeliaSonera and the Swedish government have jointly rejected France Telecom’s bid and in effect saying that the offer is not high enough. The Swedish company therefore is open to better offers.

France Telecom claims that the merger would have created the largest telephone company in Europe. That it has the potential of increasing customers by as much as 39 percent or 237 million that could save both companies nearly 700 million euros per year by 2013.

Having declined by 26 percent this year, France Telecom has recently incurred a 5.1 percent loss in Paris trading. The buy offer for TeliaSonera has hurt stock value and may continue to do so as bets regarding an increased bid abound. Recently France Telecom came out as the worst performing stock among 20 other European counterparts, while TeliaSonera shares soared 29 percent.

The deal has been labeled “a poor deal for both parties” or “a dreadful deal” by analysts.

Some might think that stacking your cash under your bed while you sleep is a good idea to hedge yourself against risk. Well, it might be far more risky avoiding risk all in all as this may not meet your financial goals and it might not even beat inflation. Hedging yourself with risky asset classes could not only mean giving your portfolio a way to minimize exposure to risk but also a way to perk up your portfolio that has long been following the market’s mood.

1.       Currency Futures

One of my closest relatives, my aunt to be exact, moved to the United States to be a Registered Nurse. She is now retiring with her husband in Canada with all those US Dollar denominated income. In times where the greenback is getting hit hard, is it a nice idea to not protect her income with the dollar’s weakness?

A way to protect your portfolio from currency depreciation is hedging yourself by buying other currency as well. If you were to hedge yourself against the weakness of the greenback by buying Euros back then, you could have sold the Euro Dollar at a high of 1.60 to the US dollar a long time ago.

2.       Short Selling

Short-Selling is definitely not for everyone. As the risk for capital loss is endless, and the reward measured by how close the company is for de-listing or chapter 11, short-selling could be a rewarding way to: Bail you out from your wrong sizing of position, or a way to reduce your position to a very comfortable level.

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United Airlines, which is a subsidiary of the world’s second biggest carrier UAL Corp., will be shutting down some of its operations, grounding its fleet by approximately 70 planes. The shutdown also includes a low-fare unit called the Ted unit in a desperate attempt to combat surging fuel costs.

The planned unit shutdown will be carried out sometime near the end of 2008. With the reduced number of planes, about 1,100 jobs will also be cut as a consequence. This plan was announce by United in April.

United Airlines, which is based in Chicago, will be doing more cutbacks in about two months. This tends to elucidate how badly the airline was affected by surges in jet fuel for up to 76 percent counting from the previous year. The Ted unit was a project started in 2004, which aimed at competing with its competitors who charge relatively lower fares, has collapsed during the previous six months.

These capacity cuts were not made arbitrarily. They were carefully planned. They know exactly which planes and routes to ground and why.

United Airlines, which employs around 52,500 personnel and crews, will be doing further job cuts regarding management and salaried workers.

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Options to insure against drop in US stocks can be resorted to as protection. For the third day the costs of using options slid for three days now, which has been within a month the longest streak ever. Computer maker Dell Inc. discloses in a report that profits have been much better compared to estimates.

Dell on June $21 has seen its puts falling down by 84 percent, which was the second greatest decline among US equity options. Regarding American Airlines parent AMR Corp., traders are now speculating on a rally. The airline company has suffered a setback by nearly 50 percent in 2008, following the end of merger talks between two rivals and the lowering of jet fuel costs. Traders also speculate on hunch that Masco Corp. this year will rebound from the 14 percent loss it incurred.

There has been a drop in Jet fuel for a second day, declining by 0.5 percent to $3.80 per gallon.

When UAL Corp.’s United Airlines realized that it would not be advantageous to merge with US Airways Group Inc., since the merger would not enable to company to save on labor costs, UAL is now trying to merge with Continental Airlines Inc.

Based on the present conditions and with a “neutral” rating, AMR, whose stock was unchanged at $7.19, probably won’t have to file for protection under Chapter 11 this year. The company’s July $10 calls, yielded an increase by 17 percent to 35 cents.

German stocks are on a five-day winning streak as concerns that higher fuel costs might cut airlines’ and automotive companies’ earnings subside.

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In a span of four weeks airlines company Deutsche Lufthansa AG posted sizeable earnings as crude oil prices stayed low this week. Tiremaker company Continental AG, which also took advantage of the low oil costs, posted gains this week.

Deutsche Postbank AG has been winning the most in two months. This winning streak started following speculations that parent company Deutsche Post will be selling the subsidiary for about 12 billion euros ($18.6 billion).

There was an added 41.76 to the benchmark DAX Index, which translates to about 0.6 percent, to 7,096.79. Climbing for two months in a row, the measure gained 2.1 percent. DAX futures that are bound to expire in June were able to gain 0.4 percent to 7,109.5. Germany’s 110 biggest companies gained in the HDAX Index about 0.7 percent to 3,641.95.

Crude oil intended for July is expected to decline after a showing that US consumption declined compared to the same period the previous year. There was a huge drop in July delivery contracts by 3.4 percent to $126.62 per barrel.

“Oil had reached clearly painful levels and such a distinct drop comes in handy, showing how much speculation is included in the price. This should have a supporting impact,” said equities head Karsten Stroh, JPMorgan Asset Management.

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CAC 40 Index of France increased by 38.38, or 0.8 percent, to 5,014.28 in Paris. This has a 0.4 percent extension of this month’s gain. There was also a 0.8 percent gain for the SBF 120 Index.

The results for France this week were varied, unlike Asian stocks that seemed to follow a uniform trend, some stocks gained while others declined:

• Air France-KLM Group (AF FP), which is Europe’s biggest airline, advanced 99 cents, or 6.1 percent, to 17.19 euros as crude oil declined extremely low in two weeks due to an overall reduction in fuel demand, which for the airline company, meant reduced fuel costs.
• Michelin SA. The much reduced crude oil prices has indeed redounded to the benefit of this company. The tiremaker, which needs oil to manufacture synthetic rubber, was able to gain an additional 50 cents, or 0.9 percent, to 57.50 euros.
• Total SA, the third-biggest European oil company, came down 36 cents, or 0.6 percent, versus 56.09 euros.
• Alcatel-Lucent SA (ALU FP), which supplies telecommunications equipment, gained 13 cents, or 2.8 percent, to 4.86 euros. It may be of interest to note that the company is gearing up to sue Microsoft Corp. for $419 million after Microsoft allegedly committed a patent violation as regards its Xbox video-game player.
• Carrefour SA (CA FP) surged high in seven days as it gained 68 cents, or 1.5 percent, to 45.07 euros. The company revealed plans of selling natural gas and electricity in Belgium.
• Electricite de France SA (EDF FP), which produces and supplies power, is on its third-week advance as it attained 1.58 euros, or 2.3 percent, to 69.58 euros. Analysts say that electricity rates in Europe will soon increase up to 10.
• Natixis SA (KN FP) advanced 19 cents, or 2 percent, to 9.78 euros. The bank said it might be forced to cut jobs about 850 out of 22,000. This statement came out because of huge financial losses the investment bank incurred due to writedowns on subprime-infected assets.

Renault SA (RNO FP) is on an eight-day high as it advances 2.00 euros, or 3.1 percent, to 66 euros. This car manufacturer will work, in a joint venture, with Suez SA’s Sita waste unit to recycle cars, by virtue of a European Union antitrust approval.

Actively traded Asian stocks in the United States surged after showing a remarkable week-long performance. Toyota Motor Corp. has escalated production of vehicles while JPMorgan Chase & Co. forecasted an increase in Infosys Technologies Ltd.’s prices of shares.

A 1.2 percent to a 163.98 one-week high rise has been attained by the Bank of New York Co.’s Asia ADR Index.

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For the Nikkei 225 Stock Average futures, which expires June, we have these data:

• Chicago 14,370;
• Singapore 14,375; and
• Osaka, Japan 14,370.

Toyota posted the largest gain in a span of two weeks that added 2.9 percent to $102.05. this in turn was the most influential regarding the index’s advance.

As surging fuel costs triggered exports of gas-efficient cars to North America, Toyota has been leading gains in domestic vehicle production the previous month, as reported by Japan Automobile Manufacturers Association.

Infosys, second-biggest software-services provider in India, made a huge leap by 8.3 percent to $49.11, the most it’s ever done from April 15. JPMorgan analysts reveal that the company’s revenue outlook has tremendously improved, prompting them to hike by 27 percent their year-end target price.

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Rumors of higher interest rates to boost lending income of Japanese banks cause Japanese stocks to soar, extending advantage gained in May.

The biggest gainer this time is Mitsubishi UFJ Financial Group Inc., which is the largest publicly traded financial institution in Japan.

Sony Corp., emerged stronger following a more than expected US economic growth, while Tokyo Electric Power Co., the largest Japanese utility, increased following the decline of crude oil recently. Aderans Holdings Co. and several other entities under Steel Partners gained momentum following a motion at a shareholder’s instance to get rid of management.

The Nikkei 225 Stock Average reached a high of 214.07, or 1.5 percent. This closed at 14,338.54 in Tokyo trading. Counting from January 10, this was the highest ever as it capped a gain of 2.3 percent this week. We see a 27.51 or 2 percent increase in the Topix index to 1,408.14.

“Investors appear to be shifting their funds from bonds to stocks as an inflation hedgeWith short-term rates likely remaining low, higher longer-term rates will help boost profitability at financial companies,” said fund management head Hisakazu Amano, T&D Asset Management Co., Tokyo.