Judging Martha Stewart the Stock

Along with her former broker, Stewart is charged with lying to investigators about the circumstances of a December 2001 personal stock trade in ImClone Systems. Prosecutors allege that Stewart acted on privileged information she got at the behest of her co-defendant, Peter Bacanovic. The jury could begin deliberating the case as early as Tuesday.

While trial observers are divided about Stewart's chances with the jury, Wall Street isn't expecting a lot from her company when it reports earnings on Thursday.

Analysts surveyed by Thomson First Call expect the company to earn 7 cents a share from continuing operations on $72.13 million in sales. For the full year, Wall Street expects Martha Stewart Living to lose 7 cents a share, excluding a discontinued wedding registry business, on $246.08 million in revenue.

In the fourth quarter of 2002, the company earned 12 cents a share -- 13 cents from continuing operations -- on $77.56 million in sales. For all of 2002, the company earned 15 cents a share -- 27 cents a share on continuing operations -- on $295.05 million in sales.

While Wall Street expects Martha Stewart Living's bottom line to firm up this year, it expects the company's revenue to keep declining. In 2004, analysts are calling for a loss of 2 cents a share on sales of $229.67 million.

Pessimists on Wall Street think Stewart's trial has seriously damaged her company, almost regardless of its outcome. Trial revelations about Stewart's temperament and her attempt to expense a $17,000 vacation probably won't sit well with her core group of readers and viewers, analysts say.

"This comes down to the fact that this business builds its competitive advantage on the persona of Martha Stewart," said Morningstar analyst T.K. MacKay. "Regardless of what happens, this company has a lot of rebuilding to do."