CEO has not been including the effects of sequestration on earnings. These cuts are more difficult to manage and EPS cant be sustained through cuts to employee benefits and layoffs. A reduction in EPS usually goes hand in hand with a reduction in stock price. COB/Ex CEO will be bailing JIT and just as predicted. Handing over a big mess to new CEO. Cash strapped (cash down to 1.9B), bleeding costs (50% payout ratio), and way overleveraged compared to peers. A bad, bad combination. Working level employees should be very frightened.
The former CEO made a huge mistake of paying out 50% cash flow as dividends. This is common when the BoDs create a conflict of interest by linking executive pay to stock performance. Everyone knows that you can temporarily prop up earnings by cutting benefits, and inflate the stock by paying out huge dividends. Long term, this is not a sustainable business model. I have yet to see anyone from executive management that has a long term vision that isn't short-circuited by short-term gain.