NEW YORK (CNN/Money) - Martha Stewart Living Omnimedia delivered a reminder to investors Wednesday that they're wagering on the company based on promise, not actual results.

The company posted a fourth-quarter loss of $7.3 million, or 15 cents a share, compared to a profit of $2.4 million, or 5 cents a share, a year earlier. Revenues were down 15 percent, to $60 million, year-over-year.

For the full year ended in December, Martha Stewart Living (down $0.72 to $35.35, Research) saw losses soar to $60 million, compared to a loss of $2.8 million in 2003. Sales fell 24 percent, to $187 million.

Driving the steep losses were ongoing declines in advertising and circulation revenue at Martha Stewart Living magazine and sharply lower revenues in its television unit.

Looking ahead to the current quarter, the picture isn't looking any brighter. CFO James Follo forecast a first-quarter loss of 35 cents a share on $38 million in revenues

The grim earnings report comes as company founder Martha Stewart nears the end of a five-month prison sentence. Stewart, 63, is due to be released from a federal prison in Alderson, W. Va. next week, having served time following her conviction a year ago for lying to investigators about a personal stock sale. Stewart, whose criminal case is on appeal, is due to serve another five months of home confinement after her expected release in early March.

The reported losses and signs of more to come did not surprise investors. Martha Stewart executives, while noting that the company is debt free with plenty of cash on hand, have warned that a financial recovery isn't expected to start until this spring.

The company's ongoing slide hasn't dampened investor spirits. Shares in Martha Stewart Living have more than quadrupled since last summer and are trading near all-time highs. The anticipation surrounding Stewart's impending release combined with a string of promising company deals have fueled the runup.

On Wednesday, investors once again showed their faith in a Martha Stewart Living rebound. Company shares neared all-time highs in afternoon trading and ended the day up more than 8 percent, to $37.40

Details on how company projects underway, including two television shows starring Stewart, will bolster the bottom line were scant.

During a conference call with analysts Wednesday morning, Follo and CEO Susan Lyne said it was too soon to provide many specifics. In addition to the television shows, the company is busy wooing advertisers back to Martha Stewart Living and discussing the impact that Kmart Holding Corp.'s pending purchase of Sears, Roebuck and Co. will have on sales of Martha Stewart home products at Kmart.

"Most of the stuff you want to know is still up in the air and dubious," said Dennis McAlpine, an independent media analyst. "Will the ad pages pick up at Martha Stewart Living? Obviously not in the first quarter. Will the TV syndication show work? We're not going to know that until September. Will something come out of the Sears-Kmart deal? We won't know for some time."

Investors did learn Wednesday that same-store Kmart sales were down nearly 6 percent in fiscal 2004, but are up slightly in the first quarter compared to a year earlier. Despite the sales drop, Martha Stewart Living merchandising revenues were up 5 percent for the year, due in part to a minimum royalty guarantee with Kmart.

Lyne, a former ABC executive who took over as CEO three months ago, called 2004 a "significant challenge" for the company.

"While I see tremendous opportunity in front of us, I am realistic about where we are today and optimistic about the future," Lyne told analysts.

One cause for optimism: Everyday Food, a magazine launched in 2003 that is drawing both readers and advertisers. Martha Stewart Living announced Wednesday that it has raised the rate base, or the circulation guaranteed to advertisers, for Everyday Food to 800,000 from 500,000 and expected to raise it again this summer.

Lyne denied past reports that the company had invested in non-eponymous products like Everyday Food as a way to distance itself from Stewart as her legal troubles worsened considerably starting with her indictment in June 2003.

The Martha Stewart brand "always has been and remains our greatest asset," said Lyne.

Brand Keys, a New York marketing firm, recently surveyed consumers and found that the domestic diva's image has vastly improved after hitting a low shortly after her March 2004 conviction. But consumer opinion is still well below early 2002 levels, when Stewart's legal ordeal was just beginning.

The company's allegiance to the Stewart name was reaffirmed in the March issue of Martha Stewart Living. In it, editor-in-chief Margaret Roach referred to Stewart's prison release as a "homecoming" and said that she would write a column for the monthly beginning in April.

Martha Stewart Living revenues, which make up about a third of the company's total sales, declined last year and will fall further in the current quarter due to fewer advertising pages, lower ad rates and lower subscription revenues.

A year ago the rate base for Martha Stewart Living was lowered from 2.3 million to 1.8 million.

Television revenues tumbled to $1.1 million in the quarter from $5.9 million a year earlier, due primarily to the September suspension of a daily syndicated home decorating and cooking show.

CFO Follo said television revenues will fall below $1 million in the first quarter ending late March. He also said the company won't know how much in advertising revenues it stands to gain from next fall's syndicated daily talk show until it begins selling commercial time later this spring.

Follo said, however, that license fees for the midday program are running higher than they did for the newly-suspended show. Seventy percent of network affiliates around the country have agreed to air the revamped show.