"Beautiful Artemis Thor Neptune Odin Delusional Sapphic Inspirational Hypnosis Painting" by Damien Hirst

A Damien Hirst painting of four skulls that was tipped to fetch at least $3 million at Phillips de Pury & Co.'s New York auction didn't sell, the biggest upset of last night's auction that missed presale low estimates by more than half. It was the third sale this week to disappoint art dealers and may herald a decline that tracks the drop in stock markets.

Phillips took $9.6 million with fees, against its presale low projection of $23 million. Two in five lots didn't sell. Gone was the party ambience that filled its loft-like Manhattan headquarters in previous seasons. Collectors such as Mera and Don Rubell, Adam Lindemann, Stavros Merjos and Maria Baibakova looked on as 21 lots found no buyers. A comparable sale a year ago fetched $42.3 million.

Phillips's sale followed two lackluster contemporary-art auctions by larger rivals Sotheby's and Christie's International this week. The latter two tallied a combined $238.7 million, 44 percent below their expected total of $429 million as the global credit crisis that cut equity value spilled into the art world.

``It was pretty brutal,'' said Los Angeles-based Merjos.

Last night, Hirst's 2007 ``Beautiful Artemis Thor Neptune Odin Delusional Sapphic Inspirational Hypnosis Painting,'' which was part of a series that appeared in September 2007 during a runway show of his collection for Levi Strauss & Co. at the Gagosian Gallery in Chelsea, found no takers at $1.8 million.

New York-based art adviser Sheri Pasquarella said the auction results were indicative of the lots' quality, which wasn't as good as works offered at Christie's and Sotheby's. Christie's, though, failed to sell its projected top lot, a Bacon self-portrait that the auction house had estimated would fetch about $40 million.

``We have seen a moderation of interest,'' said Michael McGinnis, senior partner at Phillips. ``The demand is a lot different than it was six months ago.''

Excellent Condition

The top lot, Donald Judd's 1977 vertical progression of 10 blue, stainless steel stacks, attracted a single phone bidder who got the work for $3.2 million, compared with a presale estimate range of $4 million to $6 million. The piece appeared on the cover of the sale's catalog and was considered to be in excellent condition, according to the Judd Foundation.

The auction house set its estimates before the bankruptcy of Lehman Brothers Holdings Inc. triggered the worst economic crisis since the Great Depression. In recent days, Phillips's staff had tried -- with little success -- to convince the auction's consigners to cut their reserves, or the minimum level at which pieces could be sold, up to 50 percent below the low estimates.

``Sellers had a luxury of eight years of the climbing prices,'' McGinnis said. ``They were not receptive.''

Phillips might have tried to reduce risk by offering fewer works than the 81 lots a year ago. It guaranteed a single work, a glowing neon text by Kendell Geers, which had a low estimate of $60,000 and fetched $56,250. In a comparable sale last November, Phillips guaranteed about half the lots, McGinnis said.

Chinese, Russian Works

Another notable change was the absence of works by Russian and Chinese artists whose prices escalated partly as a result of speculative buying.

Buyers passed both on brand names like Andy Warhol and Jean- Michel Basquiat and on emerging artists like Mark Grotjahn and Anselm Reyle.

Grotjahn's colorful early painting, with a low estimate of $400,000, didn't find a buyer. Another work -- a fiery orange butterfly painting -- fetched $458,500 against the estimate range of $450,000 to $650,000.

In 2003, paintings by the Los Angeles-based artist cost around $20,000, said his New York dealer Anton Kern. In May, one of his canvases fetched $1.2 million at Phillips in New York, setting an auction record for the artist.

``You can't have increases like that unless people are buying for investment purposes or everyone is leveraged,'' said Cristina Delgado, a New York art adviser, before the auction. ``We need to come down to prices in the art market before everyone began leveraging, probably another 30 to 40 percent.''

Prices include a buyer's premium, or commission, of 25 percent of the hammer price up to $50,000, 20 percent of the price from $50,000 to $1 million, and 12 percent above $1 million. Estimates do not reflect commissions.