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Martha Stewart and her Insider Trading - Essay Example

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Martha Stewart Living Omnimedia has eight core content regions - Home, Cooking and Entertaining, Gardening, Crafts, Holiday, Keeping, Weddings, and Baby and Kids - in that creative experts are constantly seeking and developing new ideas to maintain the high quality and value associated with the brand. …
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Martha Stewart and her Insider Trading
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Martha Stewart and her Insider Trading

The professionals at Martha Stewart Living Omnimedia generate a broad compilation of ‘how to’ articles, books, television programs, newspaper columns, radio sections and products relating to the eight core content areas all through the four business section.
Publishing is Martha Stewart Living Omnimedia's largest business section that accounted for US $182.6 million of total revenues for 2002. It includes magazines such as Martha Stewart Living and Martha Stewart Weddings, nearly 40 Martha Stewart books, the ask Martha newspaper column and radio show, and a music library of compilation CDs. The Television section accounted for US $ 26.7 million of total revenues for 2002, where it now offers around 30 opportunities every week for viewers to watch Martha Stewart programming. Kmart plays a huge role in Martha Stewart Living Omnimedia's merchandising section. In 1987, Martha Stewart Living Omnimedia and Kmart created a partnership that has been extremely beneficial for both companies. Sales of Martha Stewart merchandise in Kmart stores have reportedly been in excess of US $5 billion since the beginning of the partnership. (Louria, 2) In 2001, Kmart sold US $1.5 billion worth of Martha Stewart Everyday house wares, and those licensing fees accounted for almost 25% of Martha Stewart Living Omnimedia's profits. But since Kmart filed for bankruptcy on January 22, 2001, Martha Stewart Living Omnimedia finds its fastest growing section - merchandising - in jeopardy. Kmart has increasingly lost ground to competitors such as Wal-Mart and Target due to ill-advised price-cutting strategies and a mismanaged supply chain. It has already closed the doors of 250 to 350 of 2,100 stores and Martha Stewart Living Omnimedia has taken quite a hit.
It has already closed the doors of 250 to 350 of 2,100 stores and Martha Stewart Living Omnimedia has taken quite a hit.
In many ways, the IPO for Martha Stewart Living Omnimedia, Inc. has thus far been the high watermark for both the organization and its principal stockholder, Martha Stewart. It was Martha's singular good fate-as well as bad fate-to go public with her stock offering at nearly the top of the greatest bull market in American history. This timing meant that while she immediately became a billionaire on paper, the stock would likely drift down with the rest of the market, so that, financially speaking at least, she had no where to go but down as well.
Not only has she so far been unable to hold on to the initial phenomenal gains from the IPO itself, but also there have come to be other-and more troublesome-questions clouding the organization's future. One question had been hovering over the organization from the day it went public: What would happen to the shares if Martha herself-who held more of them than anyone else-were to meet an untimely end It was the same question that some investors had tossed out regularly during the IPO road show. (Louria, 3) Now that the stock was trading publicly, it was no longer a matter of mere theoretical concern: More than a billion dollars of stock market wealth hung on the ability of the organization's chairman to bolt from bed each morning and begin pursuing one of the most demanding schedules of any public figure on earth.
And there was another problem that abruptly moved from the realm of the theoretical to the real: Would Martha's organization be able to survive looming problems besetting its most lucrative business partner, Kmart Corp. The entire matter became real, immediate, and suddenly ... Read More
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