Disappointing art auctions in London and Hong Kong this month cost Sotheby's $15 million in losses on guarantees it provided sellers.

The losses occurred because the artworks either sold for less than the minimum price the auction house guaranteed to sellers, or not at all, Sotheby's said in a filing late yesterday with the U.S. Securities and Exchange Commission. Sotheby's agrees to pays some consignors a guarantee regardless of whether a property sells or at what price. Auction houses use guarantees to encourage art owners to sell through them.

The New York company can ``comfortably weather'' the loss, said Lawrence Creatura, a fund manager with Clover Capital Management in Rochester, New York. As of June 30, Sotheby's had cash of $375.4 million, according to a company filing.

``The larger concern may be what it says about the state of the art market,'' said Creatura, whose company held almost 112,000 Sotheby's shares as of June 30.

He wouldn't comment on current holdings.

A year ago, Sotheby's disclosed a loss of $14.6 million on guarantees from its Impressionist and modern-art sale in New York, prompting a same-day 8.6 percent drop in its share price. Yesterday's announcement was made after the close of the U.S. stock market. Sotheby's shares have fallen 77 percent this year to their lowest since July 2003.

Third Parties

Sotheby's said that it has outstanding guarantees of $285.5 million, of which $63.3 million was taken on by third parties it didn't disclose. Chief Executive Officer Bill Ruprecht said in May he will reduce risk by cutting guarantees.

Yesterday, the company disclosed that guarantees have fallen 50 percent from a year ago, and that it plans to ``continue to substantially reduce its use of auction guarantees until stability is restored in the global economy and financial markets.''

In London, sales by Sotheby's, Christie's International and Phillips de Pury & Co. brought in a combined 59 million pounds ($95 million), against minimum estimates of 106.2 million pounds, according to Bloomberg calculations. Sotheby's Hong Kong sale totaled $141.7 million, about half its presale estimate.

Spokeswoman Diana Phillips declined to say whether the London and Hong Kong sales were profitable.

The filing said Sotheby's will account for the loss from the guarantees in third-quarter earnings, due for release early next month.