Lehman Brothers (NYSE: LEH) reported an earnings drop [subscription required] for the third quarter in a row, but the drop was less than what analysts had expected. The last time Lehman Brothers earnings fell three quarters in a row was in 2002. Things could have been worse, but gains in equity sales and trading helped to soften the blow from the $830 million losses related to the credit crisis and mortgage mess. Lehman wrote down $700 million in the third quarter, and thinks the write-downs are finally done.

The company reported that net revenue from its equities capital markets business almost doubled over last year's. The record-high net revenue for the quarter in its equities business was $1.9 billion.

"We are not calling a bottom, but suggesting we are good at diversifying risk," Chief Financial Officer Erin Callan told analysts and investors on a conference call, according to the Wall Street Journal. Lehman expects slower economic growth in 2008, but expects company growth to rebound thanks to investment banking products being marketed abroad. Lehman slimmed down its loan commitments by about $17 billion to $10 billion since the end of the third quarter.

Lehman's stock has dropped about 26% since its high of $81.51 in January 2007. It was changing hands at $60.21 at 1:30 p.m. EST and heading lower, down about 2.5% on the day.

Lehman was first in the financial stocks earnings parade for this quarter. Goldman Sachs (NYSE: GS), Bear Stearns (NYSE: BSC) and Morgan Stanley (NYSE: MS) are due to report next week.