was extremely encouraging as well as the decision to maintain the dividend.
I'm in for 1000 shares and will scale in depending on the movement in the coming days, but for now, it's a commitment.
Good luck everyone.
The conference call was quite enlightening. BID took a charge for guarantees for the 4Q in 3Q, which is a smart move. They are also restructuring in case 2009 sales stay low so they expect to show a profit with lower sales.
I think they know the art market will stay soft for 2009 and are getting out of the guarantee business. They still have a very good balance sheet and can withstand a weak 2009. As far as the dividend they said they review that as part of their cash balance needs and we would need to wait until that review occurs to see if the dividend will be held for 1Q 09.
I was encouraged by the call. BID has a good handle on the situation and is realistic about near term sales. No one knows when this financial crisis will end. The question is who will be ready to captitalize when it does? I like BID as a brand name and organization. What is the stock going to be in two years? Unless we have a depression I anticipate it will be a lot higher than 9. So I am likely going to add to my position if it dips to low 8's.
I'm very confused by the charge... how are they able to take a charge for a guarantee unless they've already made the payment?
I don't fully understand the motivation for accounting for it in this way.
They were providing forward guidance that Q3 was going to be better than in prior years because they delayed some Q2 sales into Q3 this year.
I really don't like seeing this kind of stuff. It creates a lack of transparency, and if that's what management is trying to do, that can only be bad.
"Unless we have a depression I anticipate it will be a lot higher than 9. So I am likely going to add to my position if it dips to low 8's. "
At the price BID is at; it to me is depression prices already!
Might be bad as you say, but if no guarantees are done in the 4 qtr; they will not loose as much money in my opinion as with the guarantees. This 3rd quarter they lost? $15-25 million just on the guarantees itself!
That a lot of just getting the 5-15% of the sale price! You have to have a lot of sales revenues to make up for the guaranteed losts. I think they should give all the guarantees to Christies for them to take the loses.
I don't think that the case. They learned in last year about the guarantees in the 4th quarter and they will avoid or minimum the extend of the guarantees. That is the primary reason they were down this entire year because of the "Heard on the Street" column. It drop this stock a good 30% in one day!
Still another article quotes deeper losts:
"For the three months ending Sept. 30, the New York-based auctioneer lost a worse-than-expected $46.2 million, or 71 cents per share. That compares with a year-ago loss of $20.9 million, or 33 cents per share
Sotheby's, which often posts a third-quarter loss because of seasonal art sale trends, said the latest quarter wasn't "indicative of expected full year results."
Still, 2008 has proven exceptionally difficult for Sotheby's, which has a nine-month profit of $36.7 million -- only a third of last year's results.
Among the issues are the declining high-end art market, which is stumbling as hedge fund traders, financiers and other deep-pocketed buyers from Russia, Europe and the Middle East fall victim to turmoil in global markets.
Meanwhile, the company has lost money on commissions and on auction guarantees -- set prices it promises to art sellers who agree to offer collections and items through the company's sale rooms. The company noted many of the guarantee losses recorded in the third period relate to items being auctioned later in the year."
All I can say is they better be a positive overall in February report! Like to see 20 million in proftits for the year!
Well, they took $40M in losses on guarantees already written for Q4, and I think they are still sitting on, what $300M in guarantees? I'm guessing an even larger pile of those might be written off at the end of Q4 for Q1.