Shares of auction house operator Sotheby's (BID) are advancing after reporting mixed results for its third quarter.

WHAT'S NEW: The auction house reported a Q3 adjusted EPS loss of 78c per share on revenue of $91.5M. The analyst was expecting a smaller Q3 loss of 62c per share on revenue of $82.9M. Sotheby's CEO Tad Smith reminded investors that "third quarter results were not expected to be good" adding that the company's Q3 is normally a season of lower sales. In explaining the larger year-over-year Q3 loss, the firm cited lower net auction sales and auction commission revenue due to a timing issue in its Contemporary Art sales in London which were held in the second quarter of 2016 after occurring in the third quarter in 2015. This shift in timing accounted for $197M, or 93%, of the $211M decline in net auction sales from quarter to quarter. Secondly, the company reported a $15M swing in Inventory activities, driven by $9M in net gains, largely from the sale of a single painting in the year-ago period and $6M in net losses from sales in inventory and other inventory write-downs in the current period. Also adding to losses in Q3 was a $17.2M pre-tax charge in the quarter related to the previously announced earn-out arrangements associated with the acquisition of Art Agency, Partners.

CONFERENCE CALL COMMENTS: On the company's Q3 earnings conference call, Smith pointed out that the art advisory business "has added a number of clients and has a rich pipeline of discussions for future growth." Furthermore, the CEO added that excluding 2015's $383M Taubman sale, "we will likely see a lower sales level in the fourth quarter, consistent with the trends we've seen during the past six and nine months of down 22% and 26%, respectively."

POSSIBLE ART MARKET RALLY: With its quarterly results, the CEO said, "Underneath our seasonally low level of sales, there were encouraging but tentative indicators that the market could be looking for a rallying point. At the same time, we are thrilled with the continued results of our internal initiatives." On the conference call, Smith added, ". I think there are a lot of indicators that look positive, and yet prudence dictates that we should wait and see."

NAMES FIRST ASIAN DIRECTOR: In addition to its earnings report this morning the auction house announced that Linus Wing Lam Cheung has been unanimously elected to join the company's board. Cheung is the retired Chief Executive Officer of Hong Kong Telecom and a renowned collector of Chinese Art.

PRICE ACTION: Shares of Sotheby's are up over 11% to $38.47 per share in afternoon trading.