Martha Stewart Living Omnimedia has joined other media companies attempting to prop up their stock price in the aftermath of the Sept. 11 terrorist attacks by buying back their own shares.
The Martha Stewart board of directors on Friday authorized the repurchase of up to $5 million of the company’s outstanding common stock.
Chairman and CEO Martha Stewart said: “Our strong financial condition and cash flow gives us the ability to repurchase shares at attractive levels. We believe that this stock repurchase program is in the best interest of our shareholders.”
Company said purchases of stock will be made on the open market from time to time at prevailing market prices.
When a company buys its own shares, the total number of outstanding shares is decreased, making the remaining more valuable as each share represents a larger portion of the company. When a company buys on the open market, it generally creates additional demand for the shares, driving the price upward.
Martha Stewart stock sold for $17 per share in the days before the terrorist attacks. On Friday it closed at $13, a 23.5% drop.
Last week, Disney announced it had purchased 50 million shares of its own stock. Other companies that had previously authorized stock repurchase plans are expected to begin buying their shares if prices stay depressed.
Martha Stewart Living Omnimedia is a publishing, broadcast and mail order enterprise centered on Stewart’s lifestyle advice.