The investment bank, Lehman Brothers, in an all-out fight for its survival, said Wednesday morning that it expected a loss of $3.9 billion, or $5.92 a share, in the third quarter after $5.6 billion in write-downs.The investment bank also said that it would spin off the majority of its remaining commercial real estate holdings into a new public company. And it confirmed plans to sell a majority of its investment management division in a move that it expects to generate $3 billion.

The announcements come after Lehman’s stock lost nearly half its value on Tuesday as investors feared it was running out of options to raise capital and shore up its ailing balance sheet. Shares in Lehman, a major underwriter of mortgage-related securities during the credit boom, are down over 90 percent since hitting their peak last year before the subprime mortgage crisis.Lehman said Wednesday that it hoped to complete the spinoff of around $32 billion in commercial mortgage assets by early next year.Among other decisions, Lehman also said it would cut its annual dividend to 5 cents a share and that it remained committed to examining “all strategic alternatives to maximize shareholder value.”

“This is an extraordinary time for our industry, and one of the toughest periods in the firm’s history,” the chief executive, Richard S. Fuld Jr., said in a statement. “The strategic initiatives we have announced today reflect our determination to fundamentally reposition Lehman Brothers by dramatically reducing balance sheet risk, reinforcing our focus on our client-facing businesses and returning the firm to profitability.”Analysts said the planned spinoff reflected the poor state of the commercial mortgage markets.“It’s not a good sign,” said Brad Hintz, an analyst with Sanford C. Bernstein. “It’s really a sign of the illiquidity in the markets — that no one wants to buy these assets.”

And others warned that Lehman would face a plethora of questions about how it assigned assets to the new company.“What’s a bad asset, and what’s a good asset, and what’s in the middle?” said Jonathan R. Macy, a professor at the Yale Law School who has studied the good/bad bank structure. “There have got to be judgment calls.” Mr. Macy also expressed concern about what options the new company may have to put the bad assets back onto Lehman’s books.Lehman’s announcement came a day after the bank’s shares plunged 45 percent to $7.79 a share following reports that its efforts to secure a strategic investment from Korea Development Bank had failed. Investors also feared that the federal government would not bail out Lehman as it has mortgage giants Fannie Mae and Freddie Mac and investment bank Bear Stearns.

Shares in Lehman rose 6.7 percent, to $8.31 in mid-morning trading.The investment bank has been struggling amid growing losses on its commercial and residential real estate holdings. It has been shopping its prized investment management division, which includes Neuberger Berman. People with knowledge of the auction say Lehman has asked for final bids to be submitted by this weekend.Lehman has been under heavy pressure since the collapse of Bear Stearns, as investors believe its heavy reliance on mortgage-related underwriting and trading could lead it to suffer the same fate that forced Bear into an emergency sale to JPMorgan Chase.

Lehman has steadfastly said that its balance sheet remained much stronger than Bear’s ever was and that it continued to have access to an emergency lending facility put in place by the Federal Reserve after Bear’s near collapse.But Tuesday’s plunge of Lehman shares fanned worries about the troubles plaguing the broader financial industry and sent the Standard & Poor’s 500-stock index tumbling 3.4 percent. The decline more than wiped out the market’s rally on Monday, when stocks surged after the weekend rescue of Fannie Mae and Freddie Mac, the government-chartered mortgage finance giants.

There has been a growing sense on Wall Street that Lehman may have to solve its problems on its own. Since March, Lehman has been in a fight for its life, as some investors, including prominent short-sellers betting against the bank’s stock, questioned how the firm was valuing some of its assets. Lehman lost $2.8 billion in the second quarter and was forced to raise $6 billion in new capital. But investors were not placated, and the firm was compelled to explore more extreme measures. Mr. Fuld has replaced virtually every major division head, including the firm’s president and chief financial officer.During that time he has replaced the global head of fixed income — the division from which most of Lehman’s problems have arisen — twice.

Safeway has opened a smaller-format store in Southern California, and Jewel-Osco is building one in Chicago. Wal-Mart plans to open four “Marketside” stores in the Phoenix area this fall, and Whole Foods Market is considering opening smaller stores.And here in the northern suburbs of Pittsburgh, the grocery chain Giant Eagle opened a Giant Eagle Express last year that is about one-sixth the size of its regular stores. It has gas pumps, wireless Internet and flat-screen televisions in a small cafe, a drive-through pharmacy and an expansive delicatessen that offers sushi, rotisserie chickens and ready-to-heat dinners. “It’s perfect,” said Dusty McDonald, a 29-year-old bank teller who was buying breakfast sandwiches recently for her co-workers at the Giant Eagle Express. “It’s on my way to work. It only takes me 10 minutes to get in and out.”

The opening of smaller stores upends a long-running trend in the grocery business: building ever-larger stores in the belief that consumers want choice above all. While the largest traditional grocery stores tend to be about 85,000 square feet, some cavernous warehouse-style stores and supercenters are two or three times that size.Statistics compiled by the Food Marketing Institute show that the average size of a grocery store dipped slightly in 2007 — to a median of 47,500 square feet — after 20 years of steady growth.The biggest push in such stores is coming from the British retailer Tesco, which made a splashy entry into the United States last fall, opening a 10,000-square-foot Fresh & Easy Neighborhood Market in Las Vegas.

Since then, Tesco has opened 72 stores in Nevada, Arizona and Southern California.Gary Smith, founder of Encore Associates, which advises the food and consumer goods industry, said the smaller stores opened by other chains were “a loud message to Tesco that they are not going to be able to walk in and grab market share.”Mr. Smith added: “It’s also a way for them to do some testing for if and when Tesco comes to their market. They are better able to counter it.”Besides Tesco, grocery retailers face competition on multiple fronts. Chains ranging from Target to CVS to dollar stores are selling more groceries, and some small convenience stores — long the domain of warmed-over hot dogs and microwave burritos — are offering higher-quality food.

The big grocery chains are not thinking about closing their larger stores, which have been a success. But they hope to capture new business with the smaller stores, appealing to consumers on days when they do not have time for a long shopping trip.“The average person goes shopping for 22 minutes,” said Phil Lempert, who edits Supermarketguru.com, a Web site that tracks retail trends. “You can’t see 30,000 or 40,000 products. We are moving into an era when people want less assortment.”Jim Hertel, managing partner at the firm Willard Bishop, which advises supermarkets, added, “If you’ve got 50 feet of ketchup and what you want is Hunt’s 64-ounce and you can’t find it, people get overwhelmed.”

Of course, small grocery stores have been around forever, and some old-time neighborhood markets still exist. Meanwhile, a handful of specialty retailers have proved that shoppers will flock to smaller stores if they are offered a novel experience.Trader Joe’s, for one, has thrived by offering a limited selection of high-quality, relatively inexpensive products in quirky stores that are 15,000 square feet or less. Aldi and Save-A-Lot are drawing customers in droves by selling a limited assortment of aggressively discounted products.What distinguishes the new stores is that they are being built by more traditional retailers, and they emphasize fresh, prepared foods for busy consumers.

Kevin Srigley, a senior vice president at Giant Eagle, whose stores are spread across western Pennsylvania, Ohio, West Virginia and Maryland, said the express store seeks to provide customers with a “smart stop to save you time on the things you need most,” in addition to offering fresh foods.He said the idea for the express store came from Tesco stores in Europe — his company has a longstanding relationship with the British retailer — and from research that detailed the varying needs of consumers. Mr. Srigley said he was pleased with many aspects of the company’s first Giant Eagle Express store, in Harmar Township, like customer reaction to the prepared foods and baked goods. But since the store was meant as a laboratory, he said, Giant Eagle may tweak the concept before opening more of them.

Will customers come to the smaller stores? Analysts said that Tesco’s initial sales fell short of expectations and the company stopped opening new ones for several months this year to assess customer feedback and make adjustments.Still, a Tesco spokesman, Brendan Wonnacott, said that the company was pleased with the stores’ results and that the number of customers and sales were increasing.“This is a format we are excited about, that our customers are excited about,” he said.The Fresh & Easy Neighborhood Market in Laguna Hills, Calif., offers row after row of bagged produce and its own line of prepared meals that are either chilled or frozen. Customers shopping there recently said they liked the store, though several said they wished that Tesco carried more British specialties.“They have the best frozen food I’ve ever tasted,” said Nathan Cromeenes, 35, who lives nearby and longed for English shortbread. He said he liked not having to choose among 50 varieties of spaghetti sauce. “They just have one, and it’s really good.”

Dana Gurr, a 49-year-old saleswoman in Laguna Hills, was less enthusiastic. She said the store was sterile and the vegetables went bad quickly. “It’s not that fresh, but it is easy,” she said.The reviews were similarly mixed, though mostly positive, at the Giant Eagle Express outside Pittsburgh.Peter and Kim Maguire stopped by the store for some last-minute items en route to a camping trip. They ended up buying chips, strawberries, blueberries and hummus.“We pop in here for little things we forget,” said Ms. Maguire, 39. Her husband, 38, added that the store has “great lunches,” including sushi and burritos.