Lehman said it made a loss of of $3.9 billion between June and August, taking its losses this year to $6.6 billion.
To shore up its weak financial position, it has slashed its dividend and will sell a stake in its lucrative fund management arm.
However, no "white knight" investor has stepped forward to bolster the firm.
The fourth largest US investment bank will also reduce its exposure to residential mortgages and spin off its commercial real estate business as part of the shake-up.
On Tuesday, Lehman's shares plunged 45% on fears about the state of its financial health amid concerns that it was struggling to raise much-needed capital.
As a result, the bank was forced to rush out its third quarter results a week early in a bid to boost investor confidence.
"This is an extraordinary time for our industry, and one of the toughest periods in the firm's history," said chairman and chief executive Richard Fuld.
Lehman gave no indication that it had found a backer to offer it a fresh capital injection.
Earlier, Korea Development Bank (KDB) said it had pulled out of talks with Lehman Brothers with regard to possible investment in the US bank.
"We are announcing that we ended talks at this point in time because of a disagreement over conditions of a transaction and considering domestic and foreign financial market conditions," KDB said in a statement.
State-run KDB said the decision came because of disagreement over terms and current financial market conditions.
Lehman had hoped to secure a deal with the Korean fund before announcing its third-quarter earnings.