AOL to Scrap 20% of Work Force

Some 2,000 AOL employees, or 20% of its global work force, will be handed pink slips starting Tuesday as Time Warner's Internet unit continues a realignment it says is allowing it to increase its investment in "high-growth areas" while scaling back in areas "with less growth potential or those that aren't core to our business." One analyst estimated the cuts could save AOL $120M-$150M annually. Despite the cutbacks, AOL CEO Randy Falco, who disclosed the move in a memo to employees, said the company would launch in seven new countries and operate in 30 by the end of next year. Falco has been reorganizing the company since his arrival last year, including making a number of acquisitions to boost advertising operations. The company, according to Falco, is now focused mainly on Platform A, a new division formed last month that encompasses all its ad divisions; the AOL publishing business; and on-line access services. Some 5,000 jobs were cut just before Falco arrived at the company. About 1,200 layoffs were to be announced Tuesday in the U.S., with the remainder in Europe and India, though additional U.S. cuts were expected to be announced later.

Sources:Company memo, Reuters, New York Times, Bloomberg,
Commentary: AOL Plans To Cut 2,000 Jobs As Expected • America Online Busts A Move • No Breakup in Sight for Time-Warner
Stocks to watch: TWX. ETFs: HHH, FDN. Competitors: YHOO, GOOG.
Earnings call transcript: Time Warner Q2 2007

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Comments

[Moss:]

It seems too little, too late for AOL. They should have started doing this years ago, now they are so far behind that it is almost impossible to catch up. Look for Time Warner to onload AOL by the end of the year, early next year at the latest. Who could buy AOL? I know it sounds out there, but one of the rumors I keep hearing is Yahoo! www.newsvisual.com/new... , which is also doing anything it can to catch up to Google, and Yahoo! would love to get its hands on AOL's ad business.

2007 Oct 16 10:52 AM

[Frank Li:]

Seems to be in a downward spiral it can't get out of.

2007 Oct 19 10:36 AM