Corrections Corporation of America Message Board

don't you find it interesting that our paths have crosses again?
Sure you're not from n'vegas?

even I'll stop paying any attention to you. Yes..
just remember
that while you're throwing dirt at
PZN you're slowly losing ground. You are on the wrong
side. Is it possible for you to change dugouts or are
you simply STUCK in place.

what's up Doc?

Could it be that Wackenhut is crying the blues
because PZN got 90% of the domestic business, as reported
in the CC last week?

BTW, PZN just printed
22, on its way to those "mid20s". May will be a good
month for PZN longs, methinks.

Thanks for the information. PZN is crushing the competition.
Be sure to post on the WHC board.

BUSINESS
WACKENHUT SAYS LACK OF CONTRACTS
HURT STOCK
Stephen Pounds Palm Beach Post Staff
Writer

05/07/1999
The Palm Beach Post

FINAL
Page 8D
(Copyright 1999)


Wackenhut Corrections Chief Executive George Zoley on
Thursday
blamed his company's depressed stock price since
January on a dearth
of new contracts and bad press,
and predicted it would jump sometime
this
quarter.

Zoley spoke to shareholders at the company's
annual meeting Thursday
at the Ritz Carlton in
Manalapan.

The company's stock price hit its high for the
past year, $28.63 a share,
on Dec. 31, and fell to
$15.88 on April 14. But if Thursday's closing
price
is any indication, Zoley may be right. Wackenhut
Corrections
(NYSE: WHC) ended the day at $19, up 63 cents a
share.

Zoley said Wackenhut Corrections was awaiting
decisions by state
legislatures on privatizing more
prisons, and many of them meet in the
first quarter of
the year.

"The first quarter is a period of
inactivity on the part of states deciding
about new
privatization contracts," he said.

He said the stock
also has suffered from negative news stories about

privatization.

"Typically, they are union-sponsored type
articles," Zoley said.

In February, about 125
publicly employed correctional officers
protested in
front of the Wackenhut Corrections Corp. headquarters
in
Palm Beach Gardens against the conversion of
public prisons and jails
to private management. The
protest was organized by Corrections
USA, a nonprofit
advocacy group, and the correctional division of the

state's Police Benevolent Association.

Herb
Ginsberg, a Wackenhut Corrections shareholder, suggested
the
stock might have fallen because of the creation
of Correctional
Properties Trust, a real estate
investment trust formed in April last year
by Wackenhut
to buy prisons it builds.

Zoley denied that,
saying contract announcements in the second quarter

would bring attention to the company and boost the
price of the stock.

Wackenhut Corrections also
disclosed first-quarter results Thursday.

It
reported a 37 percent increase in revenue to $97 million
from $71
million in the first quarter of 1998. Net
income rose 44 percent to $4.8
million, or 22 cents
a share, compared to $3.4 million, or 15 cents
a
share, before new accounting measures were
adopted. After instituting
new accounting practices,
earnings were restated and the company
showed a loss
of $8.1 million, or 36 cents a share, for the first
quarter
of 1998.

Wow, RP, what a great post. Great analysis, great
advice, great balance - a model for everyone. I bet
you've only been married once.

Cleo, I was
worried that you tried following me to Serbia and got
detained. Nice to have you back, especially in such gentle
tones. I will agree with you about old CCA being able to
do the debt deals, too. In fact, Anderson1 even told
us that it was CCA's credit power that would give
the newPZN enhance capital raising ability. Last
summer I begged Anderson to tell Doc to "Do the merger,
drop the REIT". I still feel the merger was important
and necessary to un-split the business (private OPCO
makes it work). But I still wonder how paying out
almost a half billion dollars this year in dividends
enhances the company's credit standing/market value. At
least I get my piece of the half-billion.

No investment like this is a no brainer.. This
stock was once 40+ and is now 20+. I like the PZN
prospects, but if this was really a no-brainer everyone
should sell the house and buy lots more. not so.

You think stoppage of equity sales was a tacit
admission by the management it is STUPID to continue doing
so at such depressed prices - I think everyone would
agree with this message but others might say it
differently. Yes, management recognized the stock is
underpriced and stopped the sales because while they aren't
technically dilutive, debt financing is financially preferred
given this stock price and the present cost of
debt.

Why couldn't the same thing have been done in the
'old' CCA skin? IMHO, in RETROSPECT I think you might
be correct. However, you have to remember that at
the time Doc made the decision, REITS were money
magnets. Raising equity was very easy for REITS and Doc
was no doubt heavily influenced by the huge stock
price appreciation seen in the original PZN. I think
Doc saw the coming decline in management contracts
and correctly saw that building/owning facilities was
going to be the game. This of course would require a
huge amount of capital.

Why do I say you
"might" be correct? Let's be realistic, when CCA was $40
a share, industry and company growth was forcast to
be 35-40%. If Doc had done nothing and the (industry
and company) growth dropped to ~20% as it now is,
what would have happenned to CCA stock? 20 sounds
about right to me. So CCA would be out there right now
faced with today's same challenge - issue equity @ $20
or hit the debt markets.

So in retrospect, it
seems that a whole lot of pain and gyrations were gone
through to get to where we are now but I think we would
have been here (~ $20 a share) either as old CCA or
New PZN.

I think Doc made the best possible
decision given the available information at the time. He
couldn't forsee the unprecedented disdain investors
started showing REITS last year. I suppose he is guilty
of that. He also couldn't maintain the company's and
industry's 40% growth rate. Guilty as charged here
also.

The bottom line is that "we are where we are" and
each investor or potential investor should make their
decision looking forward. I've benefitted from your
previous posts and look forward to the future ones. They
need not be Happy posts; critical posts are much more
useful than cheerleading posts but let's concentrate on
today's and tomorrow's challenges. Plenty lay ahead.

If you don't understand the brillant move that
Doc (President of PZN) pulled by creating the REit,
just look at Wackenhut (WHC) which is cutting their
dividend completely out, because the industry's growth
opportunities. The want to use cash that was being paid out in
dividends to fund their growth. Wackenhut will also pay
Corporate Taxes. PZN on the otherhand will grow at 30%
because of their ability to fund growth with appropriate
debt. No corporate taxes and positive leverage on their
debt. This stock could see 45 to 50 in 18 months.
Meanwhile, just keep clipping coupons.