AOL to Scrap 20% of Work Force

| About: Time Warner (TWX)
This article is now exclusive for PRO subscribers.

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.

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.