Martha Stewart Returns to Work, Addresses Staff

After five months in prison and a weekend spent at her 153-acre suburban estate, Martha Stewart (search) reported back Monday to her company's corporate headquarters in Manhattan and spoke to her employees.

"All of you are my heroes," Stewart told the crowd. "It's really wonderful to be back."

A beaming Stewart returned to the headquarters of Martha Stewart Living Omnimedia Inc. (MSO), blowing a kiss and waving as she arrived to speak to cheering employees.

With barely a pause since she was released from a federal women's prison in Alderson, W.Va., on Friday, Stewart addressed a staff diminished by layoffs in her absence but also no doubt encouraged by a rising stock price.

"I've missed you, as you can imagine. I've thought about you every single day," Stewart said.

Stewart said she had had "the tremendous privilege" of meeting a cross-section of people in prison and "learned a great deal about our country."

Stewart showed her staff the gray-and-white knit poncho she wore when she left prison in West Virginia on Friday. She said it didn't come from a fancy store, but had been crocheted for her by a fellow inmate, who gave it to her the night before she left.

The poncho was seen live on TV as Stewart boarded a plane for New York following her release. Since then, Stewart said, there has been a flood of e-mail and other messages, asking about the poncho and the pattern.

She said she would try to get that pattern from the prison inmate, who worked with yarn from the prison commissary.

Stewart, 63, will have to make some adjustments in her new working life. She will be answering to a new chief executive and president, Susan Lyne (search), who replaced longtime confidante Sharon Patrick last November.

Meanwhile investors, counting on a positive bounce from Stewart's return, have bid up her company's stock to triple the level it was when she was convicted on March 5, 2004, of lying about a stock sale. She was released from a federal prison on Friday.

Last week, the company reported a fourth-quarter loss of $7.3 million, compared with a profit of $2.4 million for the same period a year earlier — reflecting continued declining magazine advertising revenues and the hiatus of its syndicated daily cooking show starring Stewart.

The stock actually slid more than $3 on the day Stewart was released.

Under terms of her five-month home detention, Stewart is allowed 48 hours a week to work outside the home, and she will be commuting the 40 miles to her office from her home in Katonah, in Westchester County. She also will be required to show up to work with an electronic ankle bracelet.

Stewart was convicted of obstructing justice and lying to the government about her 2001 sale of nearly 4,000 shares of the biotechnology company ImClone Systems Inc. (IMCL), run by her longtime friend Sam Waksal.

Prosecutors claimed Stewart received a tip that Waksal was unloading his shares ahead of a negative government report about an ImClone cancer drug. The stock tumbled in the following days, and Stewart saved $51,000 on the sale.

Stewart's lawyers argued the sale was based on a prearranged agreement with her stockbroker to sell once the stock dropped to $60 per share. The case came in the midst of a federal crackdown on corporate corruption, and Stewart is one of the most prominent figures to serve time in the wave of scandals.

Stewart resigned as chief executive and chairwoman of her company in June 2003, after her indictment. Following her conviction, she stepped down as chief creative officer and resigned from the company's board, but remains as founding editorial director.

Rebuffed twice in her attempts to obtain new trials, Stewart opted to enter prison early rather remain free pending her appeal. An appeal hearing is scheduled for March 17.

Besides looking out for her company and writing a column for her magazine, Stewart also is slated to star in two television shows: a revival of her daily homemaking show and her version of NBC's "The Apprentice" hosted by development billionaire Donald Trump (search).

Reuters and the Associated Press contributed to this report.