• by Paul Gough , February 29, 2004

What a difference a day makes. Or, in this case, a few minutes.

At the opening of trading Friday on the New York Stock Exchange, shares of Martha Stewart Living Omnimedia were bouncing around the $13 mark, where they had been all week. Its founder and namesake, we all know, has had her ups and downs since her federal securities fraud trial opened. And stock in Martha Stewart Omnimedia has had its ups and downs too, since the government started an investigation on her trading of shares of Imclone.

But later Friday morning, U.S. District Judge Miriam Goldman Cedarbaum dumped the most serious charge of securities fraud against Stewart, saying that the federal government hadn't given enough evidence to merit bringing the charge to the jury for consideration. Prosecutors said Stewart had made three public statements in June 2002, when the investigation of her Inclone trading became known. At the time, she said the Imclone trading had been proper and prearranged.

That, prosecutors said, misled investors in Martha Stewart Living Omnimedia.

Cedarbaum wasn't convinced.

"I have concluded that no reasonable juror can find beyond a reasonable doubt that the defendant lied for the purpose of influencing the market for the securities of her company," Cedarbaum wrote Friday.

That was the Vitamin E that MSO needed to bust out of its slump, which had seen the stock as low as the $7 range that it had been during the past year or so. The stock opened the day at $13.10. Between 11 a.m. and 11:30 a.m., when the judge's ruling was made known, the stock shot to $14 and made it as high as $15.25 before the end of the day. It closed at $14.53 a share, up $1.43--or 10 percent--over Thursday's trading.

Volume was 6.5 million shares, higher than the six-month average of 390,181.

Not that everything for Stewart or MSO is, as Stewart would say, a good thing.

Stewart still has to face three other charges. Testimony at district court in lower Manhattan ended last week. Closing arguments will begin today.

And MSO has a long way to go. While fourth-quarter and full-year results for the company haven't yet been released, another measure--ad pages and revenues--haven't been pretty. According to the Publishers Information Bureau, ad pages at Martha Stewart Living dropped from 1,887 January- December 2002 to 1,234 January-December 2003. Ad revenue fell at the flagship magazine to $161.8 million in 2003, from $234.3 million a year earlier.