The loss of this management contract points up the value of owning prisons rather than managing them. If you manage a prison, you have to compete with others who may be willing to accept paper thin margins at the end of thecontract. If you own a prison, at the expiration of your contract, the local authority can look to replace you, but they also have to replace the facility, which now is difficult to do in the current economic environment. In addition, if you own a prison you get to depreciate it and thus save on taxes.
CXW's recent purchase of the Colorado prison looks like a good move, and will probably more than make up for the lost revenues in VA.
You're right, doesn't sound good, if this was one of ours. Anyone confirm that we lost one? No word out of our very quiet IR dept. Also, WHC have their Earnings CC on Wed. Feb. 12 at 4:00 pm (1 hour after CXW). Any significance in this, coincidence, or one-upsmanship, or what? Sure hope we can hear of one, or several, new contracts, or even renewals, from our very quiet IR dept. Good luck longs.