C'est la Vie, Bruce Wasserstein

Lazard has been seen as surviving the subprime crisis through its focus on the advisory business.

"We are an intellectual capital firm," declared Bruce Wasserstein, Lazard's chief executive in January. "We are differentiated from investment banks, commercial banks, brokers, and boutiques."

As it turns out, Lazard is not so different, having a little credit problem of its own.

Write-downs of $28.5 million on its Paris bank's portfolio of corporate debt contributed to a 71 percent drop in first-quarter earnings, a much sharper decline than expected. Shares of Lazard are down 6 percent today.

"The unprecedented market and credit environments negatively impacted the value of the debt of even investment grade corporate issuers and, therefore, our Paris bank's portfolio of debt securities," said Michael Castellano, Lazard's chief financial officer.

The firm, he added, is making changes in the way it accounts for the securities, classifying them as being held for investments rather than for trading, which should mean less volatility in earnings in the future.

Antony Currie on Breakingviews.com notes that "Had Lazard stuck to the knitting of a traditional boutique and limited its operations to one or even both of these businesses, it would have posted a decent quarter."

It's just a little credit problem, yet Lazard can't seem to catch a break from investors. The stock is down nearly 37 percent from its high of a year ago, as the outlook for mergers and acquisition activity, Lazard's core advisory business, dims.

And that's bad news -- for the time being, anyway -- for Wasserstein, who, on paper, has been among the wealthiest of the Wall Street chieftains.

Wasserstein and his famly trust own nearly 11.9 milllion shares of Lazard when stock units are converted into class A shares.

Much was made of the disclosure earlier this year that Wasserstein received $36.2 million in restricted stock units for 2007 and also received 2.7 million restricted stock units that will vest in five years under a 2005 compensation plan. That had a value of $96 million in January. Today? It's worth $88 million.

Of course, this is restricted stock for the long term: Wasserstein can't cash out today. (He also receives a salary of $900,000 under a new five-year contract.)

Where there are deals, Lazard continues to play a role. It was an adviser to Bear Stearns on its emergency sale to J.P. Morgan Chase and it advised bond insurer MBIA on the investment by Warburg Pincus.

Jeffrey Cane