13% of Redflex Traffic Systems’ yearly revenue will evaporate in the next 6 months.
You don’t have to take our word for it, just check their latest news release [here].
This one is going to hurt and Redflex knows it. Last Wednesday, the foreign held camera vendor requested that the Australian Stock Exchange halt trading their stock ahead of the news that hit on Friday about the massive corruption in Chicago and the ongoing internal investigation.
The AUS gave them their wish, but it only temporarily staved off the investor bloodletting which came during Monday’s resumed trading of Redflex common shares.
At close of market, the stock had lost nearly 25% of its value as news hit the wires in Australia about the coming demise of Redflex’s largest (by far) contract. By 2012 figures, this would mean the company will start losing money very quickly.
Redflex’s deal with Macquarie Bank in 2011 fell apart in late negotiations after a shareholder revolt, but don’t be surprised to see them seek a bidder or have a hostile takeover bid before the summer of 2013.
The news is especially problematic as legislatures in Arizona, Colorado, Florida and Ohio are considering bills to make photo ticketing illegal in their respective states.
This should be the beginning of the end for the scamera giant, but getting their equipment torn down by their customers is going to be up to voters and (typically) unwilling politicians who are addicted to the cheap money.
Tracking and tagging motorists like cattle isn’t easy business, but massive corruption is not the way to stay under the radar for a company like Redflex.