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Martha Stewart image coming under attack

(CNN) -- Martha Stewart's image has taken a beating lately.

The homemaking queen, once associated with linens, housewares, decorating recommendations and perfectly crafted pastries, has found herself tarred with the scandal brush currently smearing Wall Street.

Stewart sold several thousand shares of the ImClone biotechnology firm just prior to the company's announcement that the Food and Drug Administration was not going to approve an anti-cancer drug ImClone had been developing.

ImClone's former CEO, Sam Waksal -- a friend of Stewart's -- was arrested June 12 on charges of insider trading and perjury. Stewart is being investigated but has not been charged with any wrongdoing.

In her regular appearance on CBS's "The Early Show" Tuesday, Stewart said, "I think this will all be resolved in the very near future and I will be exonerated of any ridiculousness."

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But the ImClone mess is only one of Stewart's problems. "Martha, Inc.," Christopher Byron's biography of Stewart, painted a dim picture of Stewart as a person, portraying her as a driven, often abrasive CEO who alienated friends and employees even as her company, Martha Stewart Living Omnimedia, was becoming a Wall Street darling.

Meanwhile, her most notable client, Kmart -- which markets a long line of Martha Stewart Living merchandise -- declared bankruptcy early this year. Stewart has stood behind the department store as it reorganizes.

The public has long had a love-hate relationship with Stewart. She is widely admired for her design and business acumen even as she's disparaged for her perfectionist impulses and sheer omnipresence.

Given her recent woes, Wall Street has not been kind to Stewart, a former stockbroker and current New York Stock Exchange director, even though she has not been charged with any wrongdoing by any authority to this point. With her company and personal image so tightly wrapped together, the price of Martha Stewart Living Omnimedia has dropped more than 20 percent.

Stewart's holdings in her own company have taken nearly a $200 million hit, wiping out more than a quarter of her net worth, according to one estimate.

Though observers believe her company's fundamentals are strong enough to withstand the current beating, the future of Stewart's own image appears to depend strongly on the outcome of the situation.




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