January 28th, 2009
AOL lays off 700 due to ad meltdown
AOL, a unit of Time Warner, is laying off 700 employees, in part due to a falloff in advertising revenue thanks to a weak economy, as well as recent structural changes intended to “refocus” the online behemoth, according to AllThingsDigital’s Kara Swisher.
AOL CEO Randy Falco sent a memo this afternoon to AOL staff about the layoffs and other cost cuts being made. The layoffs, a 10 percent reduction in workforce, will take place over the next several quarters, with most of the U.S. layoffs to be completed by March, Swisher reports.
(AOL has 7,000 employees world-wide, mostly located in the U.S.)
AOL is also eliminating merit raises and consolidating facilities.
Time Warner has been trying to sell AOL to Yahoo and turn around profitability for the unit by shifting resources. Now it’s a three-armed beast: Its ad unit; a communications and social-networking arm, People Networks; and its recently launched MediaGlow content studio.
The old access business, which has provided the bulk of AOL’s revenues and profits, is on its way out, too.
AOL will also be consolidating facilities in Silicon Valley, Los Angeles and at its original homestead in Dulles, Va., to focus on its new New York HQ.
AOL has seen drastic declines in growth, and in a recent financial report, said its ad business dropped almost 20 percent year-over-year. The company itself is now worth just $5.5 billion.
Andrew J. Nusca is an associate editor for ZDNet and SmartPlanet.
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