Martha Stewart Living signs Emeril Lagasse deal

Martha Stewart listens to former President Bill Clinton describe her pledge during the Clinton Global Initiative in New York September 27, 2007. Martha Stewart Living Omnimedia Inc posted disappointing quarterly results and outlook on Tuesday, pushing its shares down 2 percent even as it announced a deal with celebrity chef Emeril Lagasse.

NEW YORK (Reuters) - Martha Stewart Living Omnimedia Inc posted disappointing quarterly results and outlook on Tuesday, but announced a deal with celebrity chef Emeril Lagasse that helped bolster its share price.

The publisher of magazines such as Martha Stewart Living said it agreed to purchase all of the Emeril Lagasse non restaurant assets and also buy about 40 percent of the equity in WeddingWire.

The announcements offset concerns about the economic uncertainty of 2008 and helped push up its shares $1.06, or 17.29 percent, to close at $7.19 on the New York Stock Exchange.

"Our eyes are wide open as we look out at 2008 and certainly we all have to be mindful that there will be challenges," Chief Executive Susan Lyne said on a conference call with analysts.

The company forecast a first-quarter operating loss in a range of $4 million to $5 million on revenue of $66 million to $67 million. Analysts, on average, were expecting a loss of $4.54 million on revenue of $70.9 million for the first quarter, according to Reuters Estimates.

The company saw full-year operating income of $9.5 million to $14.5 million on revenue of $300 million. This compared with Wall Street's forecast for a profit of $16.54 million on revenue of $333.86 million, according to Reuters Estimates.

Martha Stewart Living said the guidance excluded any impact from deals announced on Tuesday.

The company said Lagasse had signed a 10-year employment contract with Martha Stewart Living, which will bring in revenue from his Food Network television shows. It also plans to look into selling his shows overseas.

"That's obviously something we will move on pretty quickly," Lyne told analysts.

RBC Capital analyst David Bank described the outlook and results as a "mixed bag," but said that the $50 million purchase of assets from Emeril Lagasse should help as it adds another well-known brand name to the company, making it less dependent on Martha Stewart's name.

"Both revenue and earnings per share were marginally below our prior expectations but they weren't materially so," he said, adding that the Emeril deal made strategic and financial sense.

"The more you can bring into the mix away from Martha the better you are," he said. "Diversifying the brands in the portfolio is a positive thing."

Net profit for the fourth quarter was $33.3 million, or 63 cents per share, compared with $16.2 million, or 31 cents per share, a year earlier. Revenue rose 22 percent to $118.5 million.

Analysts were looking for earnings of 65 cents and revenue of $121.7 million, according to Reuters Estimates.

Revenue growth was hurt by a deferral of revenue to the first quarter from the fourth quarter related to its book deal with Clarkson Potter, the company said.

(Reporting by Sinead Carew; Editing by Brian Moss/Andre Grenon)