5/31/2006Opposition Brings Red Light Camera Stock Plunge
Australian vendor Redflex and Rhode Island company Nestor Inc. find their stocks drop due to bans on camera enforcement.
Financial mismanagement and public opposition have sent red light camera stocks plunging on world markets this week. Two states, Virginia and West Virginia, have banned camera enforcement in the past year with Ohio nearing enactment of its own ban. Judges in several key cities including Steubenville, Ohio and Minneapolis, Minnesota have found the camera programs illegal. These moves have made investors nervous.
One year ago, camera vendor Redflex saw its stock plunge to A$3.01 after the Ohio House of Representatives passed an effective ban on photo enforcement. Now that a state Senate committee recommended passage of the bill last week, Redflex stock slipped even further to just A$1.86 (US $1.41) on the Australian Stock Exchange.
The sharp drop in stock price over the past year represents an A$862,495.40 (US $655,586.31) loss for Christopher Cooper, the chairman of the board for Redflex.
Meanwhile, Rhode Island's Nestor has seen its stock drop nearly in half from $6.75 in November to just $3.61 yesterday. At the end of last year, the struggling company was $59.1 million in debt.
The company cited a number of adverse factors in a filing with the Securities and Exchange Commision. These include, "... the failure of additional states to adopt or maintain legislation enabling the use of automated traffic enforcement systems;...equipment defects and other product quality problems; [and] a shift towards fixed rate, as opposed to per ticket, compensation arrangements for our speed products, which could adversely affect revenues."
Four members of Nestor's board of directors stepped down last July citing, "fundamental disagreements with the chief executive officer concerning his management of the company."