By now, the latest news about Martha Stewart is well known. The founder of Martha Stewart Living Omnimedia
We discussed the resilience of the stock, which actually rose in recent months, in an article published just before last week's big news broke. Shares continued to rise Friday until the verdict was released, at which point they unsurprisingly changed direction. They've continued to fall in trading today.
I'm reminded of the story of Steve Madden, whose namesake footwear company Steven Madden
Madden pleaded guilty and is now serving a sentence in a minimum-security prison in Florida. Interesting thing, though: His company's shares are pretty much right where they were -- up a bit, actually -- before the other shoe fell, as most of the damage was done (and undone) before the sentencing. The company's business, meanwhile, has hit some rough patches but seems wholly unaffected by Madden's legal problems.
But there are certainly key differences here. As a brand and media company built around Stewart's smiling face and mellow voice, it is perhaps more difficult to extricate her from the business. The fact that Viacom
The company's financial strength, however, gives it options. One I've seen discussed is going private, but that may be a last resort. Such a move wouldn't alleviate much of the pressure Stewart's bad publicity has created, though it would at least give it more freedom to operate outside investor scrutiny should the business continue to deteriorate.
Ever the contrarian, David Gardner recommended Martha Stewart Living Omnimedia for Motley Fool Stock Advisor subscribers in the November 2002 issue. Including the recent volatility, shares are up 64% since David highlighted the firm, beating the S&P 500's 38% gain during the same time period.
Fool contributor Dave Marino-Nachison doesn't own any companies in this story. He can be reached via email.