Another Head Rolls at Martha's Feet

No one out there should be surprised by the latest news from Martha Stewart Living Omnimedia (NYSE: MSO  ) . Today, the company announced that Publisher and Executive Vice President Suzanne Sobel would be putting the shoe leather to the pavement. The reason? The usual, ". to seek out new challenges." (We heard a similar tune last fall.)

New challenges? Please. If you wanted challenges, Suzanne, how about addressing some of the existing nightmares? After all, Martha Inc. is rife with stuff that needs fixin'. To name only one figure, that publishing division of yours? Yeah, it delivered 21% less in revenues this year while contributing to an even bigger operating loss even before you factor in selling costs.

Truth be told, MSO's fourth quarter was abysmal, with the company getting worse in just about every way. Revenues, profits, you name it: They were down big. The only uptick -- and it was minor -- came in merchandising sales. Funny thing, that. It's not that Kmart (Nasdaq: KMRT  ) sold more Martha junk. It's that Kmart had to pay up for minimums, as well as shell out for the dissolution of Martha's flooring program.

So why is the stock flying? Are investors really betting on a big redemption, as some have speculated? Who knows? Who cares? Well, I do a little or I wouldn't be writing this.

For what it's worth, I think the current, ridiculous bloat is owed to blinded fans and quick-flippers who are riding a low-float, heavily-shorted escalator in the direction of up -- for now. Will there be a floor at the top, a gentle ride in the other direction, or is this just a stairway to nowhere? I'm betting on the big air.

As I've mentioned before, Martha may have founded and/or co-opted a lot of the demand for crafts, cooking, and home makeovers. But she'll be returning to a market that's saturated by younger, hipper, and much more entertaining hosts. Hosts who don't have reputations like hers. Will the slavering fans bid up the stock once she springs from the clink this spring? I hope so. That looks like it will be the perfect time to stake out a short position. Then all we'll need to do is let Martha and Co. run their business as usual. They've proved many times that they can't keep a good thing going.

For related Foolishness, see:

• Martha's got bugs in her muffins
• Even a forgiving Fool can't figure out Martha's online shutdown.
• Watch for fancy bookkeeping in the next few months.
• Can a new CEO save this drama queen's Co.?
• Kmart has been selling less of Martha.

Seth Jayson thinks there's no lack of irony in the fact that Trump and Martha will be running twin shows. At the time of publication, he had no positions in any firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.