Earnings Preview: Sotheby's

Sotheby's (BID) is expected to report Q1 earnings after the market close on Thursday, May 7 with a conference call scheduled for 4:45 pm ET.

Guidance

Analysts are looking for a loss of (53c) on revenue of $55M. The consensus range is (62c)-(44c) for EPS, and revenue of $49.77M-$64.62M, according to First Call. In an effort to manage costs, the company recently cut its annual dividend to 20c from its earlier rate of 60c per share. The company, which has been fighting a slowdown in the global art market, announced an additional 5% cut to its global workforce that is expected to save about $24M annually. Those cuts come on top of a 15% workforce reduction announced in 2008. Sotheby's also implemented salary cuts for some of its senior executives and a reduction in U.S. pension contributions, and management expects cost savings of about $160M in 2009.

Analyst Views

On May 5 S&P cut its rating on Sotheby's to junk status, and said the company is likely to break a covenant soon unless it revises terms on its borrowing. The firm said its move reflects "what in our view has been a severe decline in company performance due to the greatly reduced art auction market" and its expectation that business will remain depressed throughout 2009.