Martha Stewart Living Omnimedia Inc., which continues to be dragged down by the legal woes of its founder and namesake, swung to a loss in the third quarter, though it was much less in the red than Wall Street analysts expected.

The company, benefiting from tighter cost controls, also said Thursday that its fourth-quarter profits would be better than Wall Street anticipated.

The multimedia company, which produces magazines, TV programs and merchandise, said it lost $3.84 million, or 8 cents per share, for the three months ended Sept. 30. That compared with a profit of $2.77 million, or 6 cents per share, in the year-ago period.

Analysts polled by Thomson First Call expected a loss of 14 cents per share.

Martha Stewart Living’s shares were up more than 10 percent, or $1.01, on the news, reaching $11 per share in early morning trading on the New York Stock Exchange.

The company’s total revenue plummeted 28 percent to $51.18 million, from $70.93 million a year ago.

The company’s publishing division was the hardest hit, with revenues falling 37 percent to $29.1 million. The results reflect lower advertising and circulation revenue from Martha Stewart Living magazine, investment spending in Everyday Food — the first publication that does not carry Stewart’s name — and a change in the timing of publication of Martha Stewart Weddings from the third quarter to the second quarter.

Last month, Martha Stewart Living announced that it was cutting its guaranteed circulation by 22 percent. Beginning next year, the magazine will reduce its rate base — the amount of circulation guaranteed to advertisers — from 2.3 million to 1.8 million.

Revenues in the television division were $6.6 million, compared with $6.4 million in the year-ago quarter.

Merchandising revenues were $8.9 million, compared with $10.1 million in a year ago. Revenues reflect the combined effect of strong sales of the company’s Martha Stewart Everyday products sold at Kmart with a higher royalty rate on those products as well as sales of the Martha Stewart Signature line of furniture, offset by the impact of product sales of Kmart store closures.

Internet/direct commerce revenues were $6.6 million, compared with $8.0 million in the year-ago period.

“Our results in the quarter were better than expected in each business segment,” James Follo, chief financial officer, said in a statement accompanying the results. “Looking forward, we will continue to invest in products and people, while focusing on building long-term profitability.”

Follo said the company has implemented cost controls throughout the business.

The company expects fourth-quarter profits to be in the range of 5 cents to 7 cents per share. Analysts polled by Thomson First Call expected 3 cents per share.

The company’s business has foundered amid the insider stock trading scandal that has engulfed and could land her in jail. Stewart stepped down as chairman and CEO in June, hours after she was indicted for allegedly lying to investigators.

The indictment stems from Stewart’s sale of nearly 4,000 shares of ImClone Systems Inc. on Dec. 27, 2001 — the day before a troubling government report on the biotech company sent its stock price tumbling.

Stewart denies wrongdoing and remains on the company’s board and continues to serve as chief creative officer. A trial is set for Jan. 12.

For the first nine months of the year, the company lost $7.42 million, or 15 cents per share, compared with a profit of $9.27 million, or 19 cents per share, in the year-ago period. Revenues were $175 million, down nearly 20 percent from $217.5 million in the first three quarters of 2002.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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