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Martha Stewart Living Omnimedia

(MSO)

will report third-quarter results before the market opens on Tuesday and will conduct its quarterly conference call that same morning.

In the second quarter, MSO posted better-than-expected results but still delivered a slight EPS deficit. In addition, the company issued a special one-time, 50-cent dividend.

Publishing was the story in the second quarter, as that unit began to turn around as it attracted more advertisers. Furthermore, that quarter included broadcast revenue from syndicated TV and

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This quarter, MSO is expected to continue to pile on losses, albeit at a declining rate, from the third quarter of 2005. For the third quarter of 2006, MSO is projected to lose 18 cents vs. a 30-cent loss a year ago. Revenue is expected to climb 39% year over year to $56.9 million from $40.85 million. So the improvement is expected to continue at MSO, but so will the losses. Unless there is a catalyst for MSO to generate a new source of revenue, I am afraid that the company will struggle to generate positive results.

There is another interesting story to tell. One measure of short interest is skyrocketing for MSO shares, as the short interest ratio soared to nearly 21.5 days. However, overall short positions have declined dramatically. The reconciling item is also the dramatic drop in average daily volume for MSO shares from well over 1 million shares per day a year ago to under 200,000 shares per day in the prior month.

While I have been well known as being an MSO short in the past, those who know me better have witnessed me playing MSO from both sides of the trading ledger. I have always played MSO as an event-driven play, and right now I see no event or catalyst to motivate me to commit capital in either direction.

Editor's Note: This column by Scott Rothbort is a special bonus for

TheStreet.com

and

RealMoney

readers. It appeared on

Street Insight

on Oct. 30 at 2:36 p.m. EST. To sign up for

Street Insight

, where you can read Rothbort's commentary in real time, please click here.

At the time of publication, Rothbort had no positions in the stocks mentioned, although positions can change at any time. Scott Rothbort has 20 years of experience in the financial services industry. In 2002, Rothbort founded LakeView Asset Management, LLC, a registered investment advisor based in Millburn, N.J., which offers customized individually managed separate accounts, including proprietary long/short strategies to its high net worth clientele. Immediately prior to that, Rothbort worked at Merrill Lynch for 10 years, where he was instrumental in building the global equity derivative business and managed the global equity swap business from its inception. Rothbort previously held international assignments in Tokyo, Hong Kong and London while working for Morgan Stanley and County NatWest Securities. Rothbort holds an MBA in finance and international business from the Stern School of Business of New York University and a BS in economics and accounting from the Wharton School of Business of the University of Pennsylvania. He is a Professor of Finance and the Chief Market Strategist for the Stillman School of Business of Seton Hall University. For more information about Scott Rothbort and LakeView Asset Management, LLC, visit the company's Web site at www.lakeviewasset.com. Scott appreciates your feedback; click here to send him an email.