Updated from 4:48 p.m. EST

The guilty verdicts against Martha Stewart and her stockbroker could prove a mortal blow to her namesake company.

For more than a year -- since allegations first surfaced that Stewart engaged in an illicit stock trade and lied to cover it up -- Martha Stewart Living ( MSO) has struggled to retain advertisers, subscribers and viewers. The company's bulls had bet that the charges against Stewart were weak and that those groups would return once she beat the rap. Now that she hasn't, the company's decline in advertising and subscription revenue may only accelerate.

"The thing that's most damaging to Martha Stewart and her company is the idea of a loss of credibility, the loss of trust," said Kim Cameron, a professor of organization and management at the University of Michigan's school of business.

Recovering that integrity will take the company a long time, if it can do it at all, Cameron said. "The company will continue to be marginalized," he said.

After a trading halt immediately following the verdict, Martha Stewart Living shares closed Friday's session down $3.17, or 22.6%, to $10.86. Intraday, the stock traded at a 52-week high of $17 as short-sellers covered their positions and other investors wrongly bet the verdict would go in Stewart's favor.

An NYSE official said the exchange couldn't halt trading in the stock until it received official confirmation from the court that a verdit was imminent. The official explained news reports of a possible verdict were not enough to halt trading.

In a statement, Martha Stewart Living said it was saddened by the verdict but said its board would meet "promptly" to react to it. On a conference call Thursday, company officials said they had contingency plans in place depending on the outcome of Stewart's trial.

In its statement on Friday, the company again stressed that its assets, including $169 million in cash and short investments, would see it through its current troubles.

"We are confident that our assets are more than sufficient to continue MSO's development as a leading 'how to' brand-building company," the company said.

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