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Corrections Corporation of America Message Board

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  • flipper_58 flipper_58 May 20, 1999 12:40 PM Flag

    Value

    Your right. But importantly understand that PZN
    will need to borrow to pay that dividend. They will
    not be able sustain the $2.20 through normal cash
    flow until 2000. Again the reason is the inducement
    fee is paid out to CCA but it does hit a one time
    expense at PZN, it's capitalized over a long period, so
    of course FFO changes by a small amount.

    I
    agree this company is trading like it's going bankruot
    which I don't feel is the case as I too boought a lot
    fo shares in this week.

    We'll get our
    dividends, but watch the cash going out that is not included
    on a line item.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • There seem to be alot of people who are afraid
      that PZN may have to borrow to pay the special
      dividend. Sounds logical since none of us would buy stock
      with a credit card, right? Well, consider this: PZN is
      not paying the special dividend because they think
      their investors are "soooo special" and need some good
      lovin' to keep them on board. They are paying it because
      they have to. When they acquired CCA they also aquired
      the accumulated profits for the year for CCA - which
      according to the new REIT status - had to be returned to
      guess who... the shareholders. What PZN got the chance
      to do was spend CCA's money last year to invest in
      new capital expenitures - essentially borrowing our
      money last year interest free! What a great idea. Sure,
      they'll borrow to pay us back this year - but in the
      interim they have already effectively borrowed the money
      for a year interest free. They are already ahead of
      themselves. Bravo. Confucious says, " When hiking in the
      forest, don't lose sight of the trees."

      • 3 Replies to mr_spreeman
      • but, why doesn't PZN just borrow enough to give us a $20 per share dividend? As long as we're at it...

      • Wonderful ananlysis by both bulls and bears on
        this board. I have seen things get totally vile on
        boards of other stocks that are tanking, and here
        everyone just seems very spirited, at times a little
        overheated, but basically civil.

        I am in the bull
        camp, though I do hate hearing that IR actually claimed
        this stock was tanking on false internet rumors! That
        is about the lamest thing I have heard in a
        while.

        The stock is tanking because it is being vigorously
        downgraded by widely followed analysts and dumped by unnamed
        institutions. They are downgrading + dumping because of
        surprise expenses and other such faux pas, which in
        essence amounts to a surprise loss of earnings. The only
        things an analyst hates more than a loss of earnings is
        a surprise loss of earnings. It makes the analysts
        look bad, but more seriously, surprises beget
        surprises, prove the analyst's analysis and info sources are
        not on a firm footing, and makes them wonder if
        management knows what it is doing, let alone not pulling
        their leg outright.

        The stock deserved to get
        beat up on this basis. It also, IMHO, deserves to rise
        again as the fundamentals are recognized and the
        dissappointement works its way out.

        Best - - - ST

      • <EOM>

 
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