Return to Transcripts main page

CNN Live At Daybreak

Martha's Next Step

Aired June 05, 2003 - 06:17   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL COSTELLO, CNN ANCHOR: Time to get a little business buzz now. The Martha Stewart saga did not end with her indictment.
Let's go live to New York and Susan Lisovicz.

So, what's Martha's next step?

SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: Her next step, Carol, is that she has a new title. She is now chief creative officer, which isn't quite as lofty as the title she's been used to. Martha Stewart resigned last night as CEO and chairman of her namesake company just hours after she and her broker, Peter Bacanovic, were indicted for lying to federal investigators who were probing her sale of ImClone stock. Both Stewart and her broker are pleading not guilty to the charges.

In a statement Stewart says, "My decision reflects the enormous sense of responsibility I feel to our shareholders and to all those who have worked so hard to make Martha Stewart Living Omnimedia a success."

Stewart will remain on the company's board. The company president, Sharon Patrick, will become CEO.

Stewart's also trying to round up support among her admirers. There's an open letter in USA's -- "USA Today" and MarthaTalks.com proclaiming her innocence and vowing that she will fight to clear her name. Among the things she says in that letter, Carol, -- quote -- "I simply returned a call from my stockbroker." Later on in that same letter she says, "The government's attempt to criminalize these actions makes no sense to me" -- Carol.

COSTELLO: You know, Susan, I'm wondering about the mood on Wall Street and the bigwigs over there, how do they look at this Martha Stewart mess?

LISOVICZ: Well, as you know, the stock has been hammered ever since news of this investigation came out about a year and a half ago. The shares, MSO shares, have declined about 50 percent. They're losing about half of -- half of their value. On Monday, or rather I should say on Tuesday, shares declined 15 percent on word that an indictment was imminent, but yesterday sort of gained ground. MSO shares up 48 cents, or 5 percent, closing at $10.

And as far as the overall market, a terrific day on the market yesterday. Futures are lower right now, but that economic report on the services sector gave the market a big boost. And the blue chips closed above 9,000 for the first time since August of last year -- Carol.

COSTELLO: And that is good news.

LISOVICZ: It sure is.

COSTELLO: Back to Martha Stewart for just a second though, I guess I'm just wondering whether the bigwigs on Wall Street are looking at this and taking a lesson for us. Has anything really changed?

LISOVICZ: Boy that is an excellent question. I mean you know the thing is is that there are so many inquiries going on right now. I mean just this week we got word that federal regulators are subpoenaing four years worth of e-mails from managers, CEOs. That is a huge deluge of material. And we saw that landmark settlement. We have a lot of indictments besides the one for Martha Stewart. But in terms of actual behavior, those things -- those are hard to change a lot of times. I would think that at the very least people will be more careful...

COSTELLO: Yes, I know there is an...

LISOVICZ: ... about those simple phone calls and things like that to those brokers...

COSTELLO: Yes, watch what you say. And I know there's an...

LISOVICZ: ... and what you do.

COSTELLO: ... ingrained culture there and that is always hard to change.

Susan Lisovicz, many thanks, we'll get back to you in the next half hour.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com






Aired June 5, 2003 - 06:17   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Time to get a little business buzz now. The Martha Stewart saga did not end with her indictment.
Let's go live to New York and Susan Lisovicz.

So, what's Martha's next step?

SUSAN LISOVICZ, CNN FINANCIAL NEWS CORRESPONDENT: Her next step, Carol, is that she has a new title. She is now chief creative officer, which isn't quite as lofty as the title she's been used to. Martha Stewart resigned last night as CEO and chairman of her namesake company just hours after she and her broker, Peter Bacanovic, were indicted for lying to federal investigators who were probing her sale of ImClone stock. Both Stewart and her broker are pleading not guilty to the charges.

In a statement Stewart says, "My decision reflects the enormous sense of responsibility I feel to our shareholders and to all those who have worked so hard to make Martha Stewart Living Omnimedia a success."

Stewart will remain on the company's board. The company president, Sharon Patrick, will become CEO.

Stewart's also trying to round up support among her admirers. There's an open letter in USA's -- "USA Today" and MarthaTalks.com proclaiming her innocence and vowing that she will fight to clear her name. Among the things she says in that letter, Carol, -- quote -- "I simply returned a call from my stockbroker." Later on in that same letter she says, "The government's attempt to criminalize these actions makes no sense to me" -- Carol.

COSTELLO: You know, Susan, I'm wondering about the mood on Wall Street and the bigwigs over there, how do they look at this Martha Stewart mess?

LISOVICZ: Well, as you know, the stock has been hammered ever since news of this investigation came out about a year and a half ago. The shares, MSO shares, have declined about 50 percent. They're losing about half of -- half of their value. On Monday, or rather I should say on Tuesday, shares declined 15 percent on word that an indictment was imminent, but yesterday sort of gained ground. MSO shares up 48 cents, or 5 percent, closing at $10.

And as far as the overall market, a terrific day on the market yesterday. Futures are lower right now, but that economic report on the services sector gave the market a big boost. And the blue chips closed above 9,000 for the first time since August of last year -- Carol.

COSTELLO: And that is good news.

LISOVICZ: It sure is.

COSTELLO: Back to Martha Stewart for just a second though, I guess I'm just wondering whether the bigwigs on Wall Street are looking at this and taking a lesson for us. Has anything really changed?

LISOVICZ: Boy that is an excellent question. I mean you know the thing is is that there are so many inquiries going on right now. I mean just this week we got word that federal regulators are subpoenaing four years worth of e-mails from managers, CEOs. That is a huge deluge of material. And we saw that landmark settlement. We have a lot of indictments besides the one for Martha Stewart. But in terms of actual behavior, those things -- those are hard to change a lot of times. I would think that at the very least people will be more careful...

COSTELLO: Yes, I know there is an...

LISOVICZ: ... about those simple phone calls and things like that to those brokers...

COSTELLO: Yes, watch what you say. And I know there's an...

LISOVICZ: ... and what you do.

COSTELLO: ... ingrained culture there and that is always hard to change.

Susan Lisovicz, many thanks, we'll get back to you in the next half hour.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com