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Martha Stewart Living Omnimedia MSO MII Short Presentation

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Title: Martha Stewart Living Omnimedia MSO MII Short Presentation


1
Martha Stewart Living Omnimedia (MSO)MII Short
Presentation

2
History
  • Born Martha Helen Kostyra in Jersey
  • Barnard model
  • 1980s Family Circle
  • 1990 MSL started
  • 1993 TV program
  • 1999 MSO public
  • 2002 ImClone
  • 2004 Jail

3
Martha Stewart Evil?
  • Ruthless egotism
  • Divorced the day her wedding book came out
  • F----- stupid
  • If you dont know who I am, you dont deserve
    to be at this table!
  • Getting employees to obey
  • Im rich!
  • Domineering Kmart
  • Lil Martha the saboteur?

4
MSO Products
  • Publishing
  • Martha Stewart Living
  • Body Soul
  • Martha Stewart Kids
  • Everyday Food
  • Television
  • Martha
  • The Apprentice
  • Merchandise
  • Martha Stewart Everyday Collection
  • Internet

5
Competitors
  • Oprah et al.
  • Food TV
  • Home Garden
  • Family Parenting
  • Food Gourmet
  • General Womens Interest

6
Corporate Management
  • CEO Susan Lyne
  • Founder Martha Stewart
  • Executive Compensation 13.5m for 7 people
  • Insider Trading
  • Marthas Proceeds 12.8m
  • All Insider Proceeds 88.6m
  • Guaranteed Salary and Benefits
  • Unique financial arrangements
  • Voting monopoly
  • 18.5m stock reward

7
1999-2004
  • Mediocre company
  • Amazing brand equity
  • Poor execution
  • Slow Growth
  • Mediocre margins
  • Failure to capitalize on huge market advantage

8
2004 Year in Review
  • Martha in jail
  • Worst year in history of the company
  • (74.37m) Net Income
  • Stock appreciated 186 in 2004
  • Rose 187 during jail term
  • 50 drop in ads
  • Steady decline in merchandise sales
  • Plummeting brand equity

9
2005
  • Individual investors supporting stock
  • Trading in la-la land
  • Ad sales bottom out in June
  • Switch in method of advertising
  • Continued merchandising drop
  • Some recovery
  • The Apprentice
  • Martha
  • Sirius
  • Marthas Rules

10
Future Outlook
  • Never that great of a company
  • Marthapermanently damaged
  • Not as unique
  • Tremendously overvalued
  • Lacking a business plan
  • Target market is aging fast

11
Brand Equity
  • 2000-2002 very strong
  • 2002-2004 steep decline
  • No better than Enron
  • 2004-Present recovery
  • Slightly worse than average
  • Not enough for profitability

12
Financials
  • 1.14b Market Capitalization
  • Forward P/E 131
  • P/E for peak sales year 54.3
  • Profit Margin -40.85
  • Operating Margin -43.40
  • ROA -11.54
  • ROE -40.32
  • Free Cashflow (13.78m)
  • Short Ratio 13.8 of float

13
Thesis Points
  • Martha Stewartpermanently damaged
  • Mediocre business execution
  • Pyramid Scheme
  • Too much hypeway overvalued

14
Thesis Point 1 Damaged Goods
  • Tremendous loss in brand equity
  • Sole differentiation for company
  • Difficult to increase exposure
  • Difficult to change perceptions
  • Not unique any longer
  • Too old to cut it

15
Thesis Point 2 What Business Plan?
  • Could not capitalize on tremendous brand equity
  • Poor sales
  • Poor leadership
  • Questionable product moves
  • All about Martha
  • Profits?
  • Lack of desirable products

16
Thesis Point 3 Pyramid Scheme
  • Marthacontrols voting power
  • Company serves to enrich her
  • Martha sends company the bill
  • Lavish benefits to top executives
  • Mark Burnetts 18.5m stock reward
  • Megalomaniac

17
Thesis Point 4 Way overvalued
  • Way overvalued
  • Blind faith of the individual investor
  • Trading independent of fundamentals
  • La-la land
  • Tremendous volatility
  • Trading 50 times peak earnings
  • TV shows do not add to companys bottom line
  • Poor planning
  • Volley of mediocre ideas

18
Risks
  • Copycat
  • Short squeeze
  • Tremendous volatility
  • Stock trading independent of fundamentals
  • Already fallen quite a bit
  • Some future potential
  • CEO Susan Lyne
  • Martha Stewart will claw her way back
  • Potential takeover target

19
Stock Chart

20
Closing Points
  • Stock tremendously overvalued
  • Company a Ponzi scheme to enrich Ms. Stewart
  • Lavish insider benefits
  • Poor company fundamentals
  • Damaged brand equity
  • Little reason to think company will be successful
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