AOL cuts 2,000 jobs

Reorg is part of company's transition to an ad-supported Web business

AOL LLC confirmed today that it is cutting 2,000 jobs worldwide, or 20% of its workforce.

The cuts will be made across the board, said AOL spokeswoman Anne Bentley. "We're in the midst of significant transformation of our business from dial-up ISP to an advertising-supported Web company, so we've looked across the organization, and we're looking at making the organization operate as efficiently as possible."

Bentley said AOL would start increasing its investment in "high-growth" areas of the company, including its advertising network and the publishing part of the business. "That's really our AOL products, our AOL programming channels -- things like MapQuest and Moviefone in addition to things like AOL search that are in our platform business," Bentley said.

"This realignment will allow us to increase investment in high-growth areas of the company -- as an example, we added hundreds of people this year through acquisitions -- while scaling back in areas with less growth potential or those that aren't core to our business, as we did with the sale of Tegic," AOL CEO Randy Falco told employees in an internal memo obtained by Computerworld.

In the memo, Falco said AOL recently expanded its advertising capabilities, which included the acquisition of three advertising companies, AdTech AG, Third Screen Media and Tacoda Inc., and launched a new advertising initiative called Platform-A.

"AOL now has one of the largest and most sophisticated ad networks in the world, and we're well positioned to compete where the ad market is heading," Falco said in the memo. "We refocused the business around three core areas -- Platform-A, publishing and access -- and are now managing these as three distinct but related components."

Falco said the job cuts were needed to help the company operate as efficiently and as effectively as possible.

"As a part of this realignment, tomorrow we begin a reduction in force that will, over the next couple of months, affect a total of about 2,000 people out of our worldwide workforce of 10,000," he said. "We're now in a position to win as an advertising-supported business. We have a bright future as a company if we can execute on this vision."

Copyright © 2007 IDG Communications, Inc.

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