12-Nov-07 09:08 ET In Play E*TRADE: Loweiring 4Q EPS on higher CDO losses - Lehman (8.59 ) -Update : Lehman notes that after the close, ETFC filed its 3Q07 10-Q with the SEC. As an event subsequent to the quarter, the co disclosed that it expects to incur losses on its CDO and 2nd lien invesment portfolio due to significant valuation declines in the marketplace. They lower their 4Q07 EPS from $0.18 to $0.01. This compares to the firm's previous guidance of $0.13 - $0.28. They now expect $135 mln of losses in the investment securities portfolio, based on a 30% haircut on the outstanding balance of CDO and second-lien securities of about $450 mln. While firm believes that the sharply declining valuation of the firm's CDO portfolio will certainly impact near-term earnings, they do not believe it poses a meaningful risk to ETFC maintaining its adequately capitalized status even when considering further expected losses in the co's HELOC portfolio.