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Out of Prison, Martha Stewart May Now Face A Tougher Trial

The SEC would not view a quick reemergence as chief executive warmly, said a source familiar with the agency's views who spoke on the condition of anonymity because settlement talks are underway. Such a move could undermine a possible deal that would allow Stewart to ultimately return to a top executive job and a board seat in a number of years.

Paul A. Argenti, a professor of corporate communication at Dartmouth's Tuck School of Business who worked with Stewart as a consultant in the early 1990s, was blunt with his concerns about how Stewart and Lyne would work together.

_____Live Discussion_____
Transcript: Newsweek senior writer Charles Gasparino was online to discuss the release of Martha Stewart from prison and the future of her business.
While Stewart's Stock Soars...Her Empire Takes a Hit Shares of Martha Stewart Living Omnimedia Inc. Have risen 187 percent since Stewart's sentencing. But with Stewart behind bars and off the air, total revenue was down in 2004.
Photo Gallery: Martha Stewart Released From Prison
Video: Wasting no time, Martha Stewart left prison early Friday and quickly set her sights on rebuilding her homemaking empire after serving a five-month sentence for lying about a stock sale.
Video: The Washington Post's Jerry Knight discusses corporate scandals and compares Martha Stewart's crime with those of Worldcom's Bernard Ebbers and Tyco's Dennis Kozlowski.
_____Martha Stewart Coverage_____
Martha Stewart Begins Life Outside Prison (The Washington Post, Mar 4, 2005)
As Curtain Comes Down, 'NYPD Blue's' Viewership Goes Up (The Washington Post, Mar 3, 2005)
Martha Stewart To Leave Prison With New Image (The Washington Post, Feb 28, 2005)
Complete Trial Background

"I cannot imagine those two people are going to get along," he said. "It happens in companies I work with all the time, where the person in charge won't allow a really good executive to shine because they fear that the spotlight will be taken off them. And Martha is more like that than anyone I've ever met."

In an interview, Lyne dismissed such concerns, saying she has grown close to Stewart through multiple prison visits and is confident they will have a cordial working relationship. While they have no formal agreement about their respective duties, Lyne said she expects Stewart will focus on big-picture strategic planning.

Stewart will be allowed to work outside her home for 48 hours per week during her five months of home confinement at her estate in Bedford, N.Y. She will have to wear an electronic ankle bracelet.

"At the same time, she has two big TV shows that are going to demand a lot of attention and focus because she clearly wants them to be great," Lyne said.

Not everyone agrees that Stewart's full-tilt comeback campaign will necessarily be a "good thing" for the company. Firing people on her spinoff version of NBC's "The Apprentice" might not do much to counter Stewart's reputation as a haughty ice queen, some marketing experts and analysts who cover the stock say. And the company won't make much money directly from the show.

"They have a pretty big hole to dig out of," said Douglas M. Arthur, a Morgan Stanley analyst who has an "underweight" rating on Martha Stewart shares. "The stock is strong but the numbers are quite weak. . . . And I'm a little concerned that Martha will spend all her time on the TV side, which might be good for the brand but is not going to do a lot for the company's bottom line."

Argenti called the "Apprentice: Martha Stewart" deal "exactly the worst thing she could do."

"It highlights all the worst aspects of her personality for everyone to see," he said. "It puts her right back in a situation where people can find a reason to dislike her again. And it does nothing for the company for her to be involved in that show. Zero."

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