Martha Stewart Living Omnimedia (MSO) stock, which has lost half their value over the past two years, initially surged more than 38 percent on the news that Stewart will only serve a five month prison term followed by five months of house confinement. In midday trading, the shares were up $1.89, or about 22 percent, at $10.53 on the New York Stock Exchange. Volume in the stock was extremely heavy at more than 7.7 million shares. Some speculated that Stewart would spend up to 16 months in prison.

Stewart, 62, who was previously the CEO of a $1 billion empire, will be allowed to spend five months at her farm house in upstate Bedford, N.Y. after serving five months at a minimum-security federal prison camp.

Stewart's other properties include her famous "Turkey Hill" farm in Westport, Conn., a farm in upstate Bedford, the former Edsel Ford estate in Seal Harbor, Maine, a Fifth Avenue flat and a summer home on Lily Pond Lane in East Hampton. Her Greenwich Village duplex condominium is on the market for approximately $7 million.

U.S. District Judge Miriam Goldman Cedarbaum sentenced Martha to five months in jail, the minimum the judge could impose under federal sentencing guidelines. She will be on supervised probation for two years, thereafter. Stewart will also have to pay a $30,000 fine.

Locked-Up "Living"

Washington D.C. attorney, Ellen Fredel said:

Martha Stewart received the minimum sentence of 10 months under federal sentencing guidelines, with Judge Cederbaum opting to split the time with five months in the Danbury Federal Correctional facility, a minimum security women's prison, and five months in home detention. The Danbury facility houses over 1,000 women prisoners, many in prison for drug offenses. Only a small percentage of the prisoners are "white collar criminals." As a federal prisoner, Martha Stewart probably will be housed in a cell with one or two other women. Since she is older, she will be assigned a bottom bunk. She will work for 12 cents an hour, probably doing kitchen work. Martha Stewart will be subject to strip searches after receiving visitors. People who think federal prisons are "Club Fed" should visit one.

Kmart Holding Co. reiterated its loyalty to Martha Stewart's company after Stewart's sentence was delivered on Friday.

While Stewart remains the company's controlling shareholder and founding editorial director, she was forced under pressure to resign as an officer of the business she started with a book called Entertaining.

Martha Stewart was found guilty March 5 of conspiring with her broker Peter E. Bacanovic to hide the reason behind her sale of shares in biotech company ImClone Systems Inc. The sale saved her $51,000 but annihilated about $400 million of value, approximately half of the market capitalization, of Martha Stewart Living Omnimedia (MSO).

In the past few weeks, Stewart is said to have sold off $4.36 million of her company's stock — the first time she's cashed out any of her own shares since she founded the company.

Stewart's former Merrill Lynch stockbroker, Peter Bacanovic will be sentenced later today.

As transcribed by Southern District Reporters, P.C., Stewart made the following statement to Judge Miriam Goldman Cedarbaum before Cedarbaum laid down the gavel:

Today is a shameful day. It is shameful for me, for my family, and for my beloved company and all of its employees and partners. What was a small personal matter became over the last two and a half years an almost fatal circus event of unprecedented proportions spreading like oil over a vast landscape, even around the world. I have been choked and almost suffocated to death during that time. And while I am more concerned about the well-being of others than for myself, more hurt for them and for their losses than for my own, more worried for their futures than for the future of Martha Stewart the person, you are faced with a conundrum, a problem of monumental, to me, proportions.

What to do? I ask that, in judging me, you remember all the good that I have done, all the contributions I have made through the company I founded, as well as personally over the past decades of my life that have been devoted almost entirely to productive, creative, and useful activities. I ask, too, that you consider all the intense suffering that I and so many dear others have endured every single moment of the past two and a half years.

I seek the opportunity to continue serving my country and my community in the same positive manner I always have. I seek the opportunity to repair the damage wrought by the situation, to get on with what I have always thought was a good, worthwhile, and exemplary life. My heart goes out to you and to everyone in this courtroom, and my prayers are with you. My hopes that my life will not be completely destroyed lie entirely in your competent and experienced and merciful hands. Thank you and peace be with you.

For a timeline of Martha Stewart Living go to: Money.CNN.com

Martha Stewart July 16, 2004

"I'm not afraid. Not afraid whatsoever. I'm very sorry it had to come to this," she told a crowd of media and supporters afterward, speaking in a strong voice on the courthouse steps.

On SaveMartha.com, they asked fans to pray for the woman they dubbed "the patron saint of servants and cooks."

It appears the judge heeded Stewart's request that she remember all the good Stewart has done.

Inspire & Be Inspired.

~ Jennifer King