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Martha Stewart may be out as CEO, but that doesn't mean things are getting any better at her namesake company.


Martha Stewart Living Omnimedia


reports its earnings Monday, analysts expect the company to post its third-straight quarterly loss on plunging revenue. Although Stewart has stepped aside from the company's day-to-day operations, her legal problems -- since June, Stewart has faced civil and criminal charges related to alleged insider trading -- continue to plague the company.

"We don't expect to hear a lot of good news on Monday," said Douglas Arthur, who covers Martha Stewart Omnimedia for Morgan Stanley. "My sense is that things continue to be pretty rough." (Morgan Stanley doesn't have any current investment banking business with Martha Stewart Omnimedia, but it did take the company public in 1999.)

The company is expected to report its third-straight losing quarter. Wall Street analysts project that the company will lose 4 cents a share on $61.2 million in revenue.

In the second quarter last year, the company earned $6.7 million, or 14 cents a share, on $78.6 million in sales.

Martha Stewart Omnimedia was one of the bright stars of the late 1990s. Headed and personified by Stewart, the company branched from its magazine base into television and the Internet and into retail products bearing Stewart's brand.

But things have gone south for the company since Stewart sold shares of

ImClone Systems


. Stewart's sale immediately preceded a decision by the Food and Drug Administration to reject one of ImClone's drugs, a move that sent the company's stock tumbling. Federal authorities, who already have sent former ImClone CEO -- and Stewart pal -- Sam Waksal to prison on related charges, have accused Stewart of making false statements, obstruction of justice and, in a civil case, insider trading.

After her indictment, Stewart stepped aside as the company's chairwoman and chief executive officer. She now serves as its chief creative officer.

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Despite stepping aside, Stewart controls the vast majority of voting power at her namesake company and continues to host her syndicated television shows.

The Long Slide

The allegations against Stewart have been around since the middle of last year, and Martha Stewart Omnimedia's results have gotten steadily worse. The company posted back-to-back losses in the fourth quarter of last year and the first quarter of this year.

Company officials have blamed much of the company's continuing troubles on Stewart's legal situation. Not only has the company spent money on legal fees related to Stewart's case, it also blames a decline in revenue on Stewart's legal situation. Subscription renewals and advertising pages have both declined at the company's flagship publication,

Martha Stewart Living


The decline in revenue may be increasing.

In the first quarter, for instance, the number of advertising pages in

Martha Stewart Living

declined 28% from the same period in 2002. But in June alone, the number of advertising pages declined 32% compared with June 2002, according to the Magazine Publishers Association. And in July, advertising pages in

Martha Stewart Living

fell a whopping 42.4%.

The Magazine Publishers Association estimates that revenue from advertising at the magazine fell nearly 40% in July, to $10.1 million.

Arthur expects the company's financial performance to bottom out sometime next year. But while the company is trading below is price target of $9 a share, he has not yet raised his rating from underweight.

"I want get the sense of some light at the end of this tunnel," he said.

Martha Stewart Omnimedia shares closed regular trading down 3 cents, or 37%, to $7.98 on Friday. The company's stock has fallen 19% since the end of last year.