PHILADELPHIA (Reuters) - Bear Stearns Cos Inc's (BSC.N) management shake-up could make the investment bank a takeover target, but the specter of more write-downs and possible legal entanglements from the subprime credit crisis might keep suitors on the sidelines, analysts said on Tuesday.

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Alan Schwartz, Bear Stearns' president, is expected to replace James Cayne as the firm's chief executive, according to media reports. Cayne would remain chairman, the reports said. Bear Stearns could not be immediately reached for comment.

The appointment of Schwartz, a 57-year-old investment banker, could signal that Bear Stearns would be willing to entertain offers even as its stock prices hovers near four-year lows.

"Outsiders may now be attempting to take control of the company. He must fight this off," said Richard Bove, an analyst with Punk Ziegel & Co.

"The firm will be enmeshed in meaningful legal battles for the next 3 to 5 years over its alleged missteps in the credit sector. Management is entrenched and must be overhauled," Bove said.

Bear Stearns, which has a market capitalization of about $9.1 billion, trades at about 8.5 times fiscal 2008 earnings estimates, which is less than half the financial sector average of 17.4 times earnings.

Cayne has been under fire since two Bear-run hedge funds collapsed last summer. Bear Stearns also lost money in the fourth quarter -- its first loss ever -- on bad bets on subprime mortgages.

"Periods of instability always create opportunity for those who are willing to do the proper homework and be dispassionate in the risk-versus-reward review," said one investment banker, who declined to be named.

Cayne follows other heavyweight casualties on Wall Street, including former Citigroup Inc. Chairman Charles Prince and Merrill Lynch & Co.'s Stanley O'Neal, who were forced out after their firms suffered large subprime write-downs.

Schwartz joined Bear Stearns in 1976, after an injury prevented him from becoming a professional baseball player with the Cincinnati Reds, according to media reports.

Schwartz has served in various roles at the company, including director of research, investment strategist and head of the investment banking division. He became co-president in 2001, and assumed the full role as president when co-president Warren Spector stepped down last summer.

Despite Schwartz's investment banking experience, banking hasn't been a huge part of Bear Stearns' business.

Bear Stearns has ranked as No. 12 among the top advisers of U.S. mergers for the past two years, according to research firm Dealogic. In 2007, it served as an adviser on 55 deals valued at $83.5 billion, Dealogic said.

FOREIGN OR PRIVATE SUITOR?

Hedge funds or other private financial firms could consider an acquisition of Bear Stearns in the form of a reverse merger to gain a publicly traded asset, some analysts said.

Thomas Russo, a partner at Gardner Russo & Gardner, which manages more than $3 billion, said there has been "a lot of interest from the sovereign funds in this area."

A foreign bank or investor could eye Bear Stearns to gain a U.S. presence, analysts said.

In October, Bear Stearns sold a 6-percent stake to China's Citic Securities, a government-controlled firm. Last year, British billionaire Joseph Lewis began accumulating Bear Stearns stock and amassed a roughly 9.6 percent stake by the end of the year.

Some analysts doubt Bear Stearns would see a quick takeover since it's unclear whether all the problems from the subprime mortgage crisis have emerged.

Bear Stearns, a trader of mortgages and mortgage-related investments, took a $1.9 billion write-down in the quarter that ended November 30 reflecting the reduced value of subprime mortgage-related securities.

"The firm needs to shrink rapidly and then rebuild on a more solid base. It will be a mammoth effort to fix the problems here but again, I believe that Mr. Schwartz can do this," Punk Ziegel's Bove said.

Shares of Bear Stearns shed $3.34, or 4.4 percent, to $72.91 in early afternoon trading on the New York Stock Exchange.

(Reporting by Jessica Hall in Philadelphia, and Ed Leefeldt, Jonathan Stempel and Joseph A. Giannone in New York; Editing by Derek Caney, Phil Berlowitz)