Sotheby's took the unprecedented step of writing down $17m in "probable losses" ahead of its major evening sale of contemporary art, held in New York on Tuesday. The write-down, announced in its third-quarter results a few days earlier, turned out to be well short of what actually happened on the night. The sale totalled just $125.1m, well under pre-sale estimates of $202.4m- $280.4m. Most punishing was the level of guarantees - an arrangement whereby the firm promises a certain price to the vendor of a work of art, whatever it actually sells for. Of the 63 lots in the sale, a hefty 26 were guaranteed, and Sotheby's had an ownership interest in one more. Pre-sale estimates for the guaranteed lots were $75.2m-$117.4m, and five works failed to sell at all, while some others sold sharply below their estimates. Philip Guston's "Beggar's Joy" (1954-55), for example, sold for just $10.2m, almost a third below its $15m estimate. It was reported in The New York Times to be carrying a guarantee of $18m. Worse still, there were no takers at all for the cover lot, Roy Lichtenstein's "Half Face with Collar", (1963), estimated at $15m-$20m, and also guaranteed.

"We are closing the door on guarantees," said Sotheby's chief executive Bill Ruprecht when he announced a net loss of $46.2m in the third quarter, of which $42m was for guarantees alone. "The market's changed, the world's changed."