AOL to cut 2,500 jobs prior to spinoff

Dylan Bushell-Embling | November 20, 2009

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AOL has announced it will cut nearly 2,500 employees – around one third of its workforce – as it prepares to spin off from its parent Time Warner.

The company will first ask for volunteers to take a severance package, but will resort to layoffs if it does not get the required numbers, the New York Times reported.

The cuts will begin in the US and then expand into the company's operations worldwide. AOL hopes the redundancies can save it around $300 million per year.

AOL CEO Tim Armstrong said he would forgo a bonus this year. Armstrong had been entitled to at least $1.5 million in bonus payments on top of his $1 million salary.

The announcement comes almost exactly a decade after its disastrous $163 billion merger with Time Warner. At that time, AOL, the pace-setting ISP in the early days of the web, had more than 20 million dial-up subscribers and 20,000 employees.

AOL now has just 5.4 million dial-up subs and is bleeding customers at a rate of over 200,000 per month. Its planned public listing is expected to value the company at just $3 billion.

AOL has now shifted its focus away from internet access and towards advertising-supported content, such as its tech blog Engadget and celebrity gossip site TMZ, AP said.

The voluntary layoff program will be conducted between December 4 and December 11. AOL has announced it expects to pay $200 million in severance and related costs.

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telecomasia.net

Dylan Bushell-Embling

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