According to CNBC television, Lehman executives have been holding the meetings, and have brought Neuberger management into the sales process. Analysts have said the unit, one of its healthier businesses, could be worth $7 billion to $8 billion.

A Lehman spokesman, Mark Lane, declined to comment.

A sale could help Chief Executive Richard Fuld shore up Lehman's capital as he negotiates possible asset sales.

"If they sell it, it does smack a little bit of desperation," said Chris Armbruster, an analyst at Al Frank Asset Management in Laguna Beach, California, which owns Lehman shares. "A sale indicates significant problems with Lehman's existing liquidity position. To that extent, we're not happy about a sale, but it's better than the alternative."

Lehman on Monday announced plans to report third-quarter results on Sept 18, and at that time update investors on "strategic initiatives."

Analysts on average expect Lehman to lose $2.83 per share according to Reuters Estimates, hurt by a multi-billion dollar write-down of its mortgage holdings. Lehman lost $2.8 billion, or $5.14 per share, in the second quarter.

Lehman has been in talks with investors such as state-owned Korea Development Bank on possible capital infusions, and some analysts expect it to spin off or otherwise dispose of much of its commercial real estate portfolio.

In afternoon trading, Lehman shares were down $2.04, or 12.6 percent, at $14.16 on the New York Stock Exchange, after earlier falling to $13.03.

The stock recovered some losses after Lehman's announcement dampened speculation the company might report poor results sooner. Lehman's 52-week high is $67.73, set last November 14.

Brad Hintz, a Sanford C. Bernstein & Co analyst and former Lehman chief financial officer, said a sale of Neuberger could generate a $4 billion to $5 billion pretax gain.

He added, though, that Lehman will likely need to raise $7.5 billion of new capital, diluting existing shareholders.

Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey, said: "If they raise the cash, that tells you two things: They are desperate for the cash. Secondly, if they sell at a bargain basement price, that's not good."

(Reporting by Paritosh Bansal, Elinor Comlay and Jonathan Stempel; Writing by Jonathan Stempel, editing by Gerald E. McCormick)