Half a billion?
The stock was down 6% on today's earnings release.From ArtNet:
This morning, Sotheby's released third-quarter earnings. While the auction house reported a narrower-than-expected loss-per-share of 26 cents compared with expectations of 27 cents, in a conference call with investors and analysts this morning, it seemed all anyone wanted to focus on—including current president and CEO Tad Smith himself—is thecurrent fourth quarter sales and Sotheby's whopping $500 millionguarantee to secure the collection of former chairman A. Alfred Taubman.
Perhaps, most interesting was the emphasis on covering the massive outlay as opposed to any foreseeable profit or upside on it.
While noting that auctions "achieved $780 million, led by the first two sales" from the Taubman collection last week, Smith and other Sotheby's representatives took pains to emphasize that the primary goal here is making back the money Sotheby's shelled out to secure the collection.
Smith used the conference call to explain his position on the guarantee.
"'We will not roll dice in the auction room with shareholders' money," Smith recalled telling shareholders and investors in his first call with them. "At the same time, guarantees on high-profile trophy lots can be important marketing investments and potentially generate positive momentum and product scope within our categories. Strategy, opportunity, judgement, and sensible risk management will guide our use of these guarantees."
"Some have asked me whether the Taubman guarantee which, thus far, has not involved any third-party hedges is a sign of things to come under my leadership," Smith continued. "The answer is no. There was only one Alfred Taubman. Only his collection has both the size and the uniqueness to Sotheby's shareholders to make this consignment important to win."...MORETonight's Christie's sale may fetch a billion with this starring attraction:
Uh oh: "Sotheby's Taubman auction disappoints at $377 million"
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