Sotheby's Shares Plunge as Art Boom Slows (Update3) 2007-11-08 10:06 (New York) (Adds Sotheby's stock price from first paragraph.) By Linda Sandler Nov. 8 (Bloomberg) -- Sotheby's stock fell as much as 38 percent today as three analysts downgraded the stock after an impressionist sale in New York showed the boom in the art market has slowed. Shares of the world's second-largest art seller declined as much as $18.87 to $31.20 and were trading at $31.39 at 9:44 a.m. in New York. Last night's auction took in $269.7 million, a third short of its low estimate of $401 million with commissions, according to analyst data. Sotheby's shares have been a wager on an 11-year art-price gain, hitting an intraday high of $61.40 on Oct. 11. The stock slipped in the past 10 days as 2007's potentially biggest sale approached, with mounting U.S. bank losses on subprime mortgage investments that hurt many collectors. ``Sotheby's offers investors a great way to place bets on these big events,'' just as tennis fans might put money on Roger Federer before the U.S. Open, said George Sutton, an analyst at Craig-Hallum Capital, whose rating went from ``buy'' to ``accumulate.'' Analyst Kristine Koerber of JMP Securities downgraded her rating on Sotheby's stock to ``market perform'' from ``market outperform.'' The auction house ``is carrying a lot of risk'' going into next week's contemporary-art auctions, Koerber said in a telephone interview today. Banc of America's rating went to ``neutral.'' In May, Sotheby's $278.5 million total for impressionist art was in the middle of the range and almost all the art sold. Last night, a quarter of the items didn't sell. Christie's Sale Christie's International, the world's largest auction house, fared better than Sotheby's at its Nov. 6 impressionist sale. Still, Christie's total just beat its low estimate before commissions and missed its top estimate by about 29 percent. In May, Christie's total was nearer its high estimate than the low valuation of the sale. Sotheby's went into last night's impressionist sale with significant risks, after promising sellers fixed prices for works by Vincent van Gogh, Pablo Picasso and other artists, whether the pictures sold or not. Of 26 lots guaranteed, five didn't sell and 10 sold below Sotheby's estimated range, Koerber said today. Guarantees were handed out for art with an estimated price range of $153 million to $209 million before commissions, based on data in the sale catalog, she said. Sotheby's precommission valuation of the sale was about $355 million to $494 million. Sotheby's press offices in London and New York said they would seek someone who could comment on whether the auction house had made or lost money on guarantees. Guarantee Money Van Gogh's ``The Fields (Wheat Fields)'' received no bids and didn't sell. The guaranteed painting was valued at $28 million to $35 million. Georges Braque's ``L'Echo,'' expected to go for as much as $20 million, also failed to sell and carried a guarantee. Also guaranteed, Franz Marc's waterfall picture, ``Der Wasserfall (Frauen Unter Einem Wasserfall),'' was estimated at $20 million to $30 million before commission, and sold for $20.2 million with commission. Sotheby's carries bigger liabilities for its contemporary art sale on Nov. 14, with about 78 percent of the low value guaranteed, according to Koerber. The outcome of that sale could influence confidence in the market, as contemporary art values have quadrupled in 11 years and are most vulnerable to decline, experts said. `Ripple Effect' ``If they have huge guarantees, and there are a lot of unsold lots, it could have a ripple effect on the contemporary art market,'' said New York art dealer Richard Feigen, who has sometimes invested in Sotheby's stock. For its contemporary art sale, Sotheby's has guarantees against art valued at $174 million to $220 million, including a Francis Bacon bullfight picture valued at as much as $35 million and an $18 million Mark Rothko, Koerber said. A year ago, Sotheby's guaranteed 35 percent of the value of its contemporary art sale, she said. Christie's commitments run to 52 percent of its Nov. 13 contemporary sale, Koerber said. Neither auction house would comment on the analyst's data. Bacon, Warhol The high level of contemporary art guarantees may be especially risky, as buyers have lately discounted high-priced Western artists. A Bacon painting scraped above its low estimate and two Andy Warhols failed to sell at Christie's last month in London, while China's Yue Minjun overtook America's Rothko on Sotheby's list of top lots. Tomorrow, Sotheby's reports third-quarter results. The auction house is expected to show a net loss of almost 39 cents a share, compared with a 50 cent loss a year earlier, according to a Bloomberg survey of three analysts who provided estimates based on generally accepted accounting principles. Even in a boom, Sotheby's usually loses money in the third quarter, which has few large auctions to offset the cost of an expanding network from the Middle East to Asia. --With reporting by Lindsay Pollock and Philip Boroff in New York. Editor: Beech (jmr) To contact the reporter on this story: Linda Sandler in London at +44-20-7673-2317 or lsandler@bloomberg.net. To contact the editor responsible for this story: Jim Ruane at +32-2-285-4309 or jruane1@bloomberg.net. [TAGINFO] BID US CN CHRS LN CN NI MUSE NI CULTURE NI LIFENEWS NI EREVIEW NI ART NI AUCTION NI COLLECT NI SPEND NI COS NI ERN NI EST NI STK NI NY NI US NI LONDON NI UK NI EUROPE NI ASIA #<195111.95440.1.0.60.17559.25># #<611551.1060324.1.0.60.17559.96># #<195111.95440.1.0.60.17559.25># #<611551.1060324.1.0.60.17559.96># #<195111.95440.1.0.60.17559.25># #<611551.1060324.1.0.60.17559.96># #<195111.95440.1.0.60.17559.25># -0- Nov/08/2007 15:06 GMT