Bloomberg News

Sotheby’s Falls After Auction Revenue Drops: New York Mover

March 01, 2012

Sotheby’s (BID) shares fell 9 percent after auction revenue declined in the fourth quarter amid European economic turmoil.

The New York-based art and collectibles auctioneer said yesterday that quarterly net income fell 26 percent from a year earlier to $71.5 million. It earned $1.04 a share, less than the average $1.25 estimate of six analysts surveyed by Bloomberg. Auction and related revenue fell 11 percent to $274.9 million.

Sotheby’s Chief Financial Officer William Sheridan said uncertainty inspired by the European economy -- Greece is negotiating the biggest-ever debt restructuring -- spooked some potential sellers.

“If you have a Picasso and you’re concerned with what’s going on in Europe, you may just say, ‘Let me wait 12 months until I see some stability there,’” he said in an interview.

For 2011 overall, Sotheby’s reported profit of $171.4 million, its best year since 2007. “You should focus on the year,” Sheridan said. “The variability of what can happen in each quarter is significant.”

Sotheby’s shares remain 25 percent higher this year. They fell $3.59 to $35.75 in New York Stock Exchange composite trading. The shares had the biggest drop since they closed down 11.8 percent on Sept. 30, 2011.

Expenses for the quarter rose 3 percent to $167 million. Quarterly revenue fell 11 percent, to $284 million.

Commission revenue in 2011 for every $100 in auction sales declined 10 percent, to $16.60 from $18.30, according to a filing with the U.S. Securities and Exchange Commission. The filing cited “competitive pressures to win high value consignments,” such as when the auctioneer shares its buyer’s commission with a seller to win the right to sell a valuable artwork.

To contact the reporter on the story: Philip Boroff in New York at pboroff@bloomberg.net.

To contact the editor responsible for this story: Manuela Hoelterhoff at mhoelterhoff@bloomberg.net.


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