Lehman Brothers Holdings and Bear Stearns Cos., last year's holdouts in the wave of consolidation that hit investment banking, reported sharply differing fourth-quarter results Thursday.

Lehman set itself apart from Wall Street investment houses that have reported tough times doing business amid the volatility that roiled the equity markets in 2000, particularly toward the end of the year. Profits rose 33%, to $399 million, in Lehman's fiscal fourth quarter, which ended Nov. 30. Investment banking, global equities, fixed income, and high-net-worth retail businesses fueled the gains.

Chief financial officer David Goldfarb described 2000 as a "breakout year" in a conference call with analysts. For the full fiscal year, Lehman said, net income was up 57%, to a record $1.78 billion.

Bear Stearns, meanwhile, said its net income fell 6%, to $195.2 million, during its fiscal fourth quarter, which also ended Nov. 30. Full fiscal-year profits rose 4.9%, to $869.2 million.

The two companies were the subjects of repeated takeover rumors during the summer and early fall, when investment banks such as Donaldson Lufkin & Jenrette and J.P. Morgan & Co. sold out to bigger companies looking to compete with the bulge-bracket companies that control the lion's share of the underwriting business.

Many observers have questioned whether independent operations like Lehman and Bear Stearns can continue to go it alone. On Thursday they may have gotten an answer.

"Lehman's results indicate that being independent is not necessarily a bad thing," observed Henry McVey, an equity analyst with Morgan Stanley Dean Witter & Co.

During a quarter in which companies canceled or postponed initial public offerings and activity in the merger arena slowed, Lehman said its net revenues in investment banking rose 28%, to $544 million.

'This was our best mergers-and-acquisitions banking quarter ever, and our third-best banking quarter ever," Mr. Goldfarb told analysts. Lehman is not known as a powerhouse among M&A advisers, but fees generated by its investment banking group soared 88%, to $243 million. Mr. Goldfarb attributed the rise in part to several lucrative deals in the telecommunications business.

At Bear Stearns, net revenues from investment banking declined 25.4%, to $229.4 million, due to a decline in merchant banking revenues and fees from underwriting, the company said. Samuel L. Molinaro, the company's chief financial officer, attributed the slowdown in underwriting to a dearth of new deals in telecommunications and technology.

The company reported a 20.3% gain in revenues from its global clearing business, a core operation, to $277.8 million.

The companies had showings that were better than those reported last month by other Wall Street firms. "Expectations were a little lower, so by comparison they looked better," said Guy Moszkowski, an equity analyst with Salomon Smith Barney, a unit of Citigroup Inc. Unlike Goldman Sachs Group and Morgan Stanley, neither Bear Stearns nor Lehman is active in the high yield market. Goldman and Morgan reported a slowdown from that business during the fourth quarter.

On Thursday shares of Lehman rose 1.23%, to $77.0625, and shares of Bear Stearns jumped 3%, to $55.50.


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