AOL Cuts Nearly 1,000 Jobs

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AOL cut 20 percent of its workforce today, eliminating 950 jobs in the U.S. and India. Last year, the company cut 2,300 employees during its first round of layoffs. This year’s round of layoffs was aimed at trimming the budget, getting rid of positions that no longer serve a purpose, and eliminating jobs that overlapped with the Huffington Post website, which AOL acquired just days ago. None of the 250 Huffington Post employees that joined AOL lost their jobs. Instead, 200 employees who work for AOL’s media and technology groups lost their jobs, and 750 employees in India.

In the U.S., AOL laid off reporters and editors who worked for its travel site and business, personal finance sites Daily Finance and Wallet Pop. It also cut across its news and politics sites, including Politics Daily, according to people familiar with the matter. Employees who were laid off started packing up their belongings on Thursday, a person familiar with the matter said.

The operations in India are in part a vestige of AOL’s old business as an Internet service provider, starting with call center outsourcing into 2002 and later changing into a business operations center. Recently, the group focused more on tech and financial support as well as functions such as advertising operations.

Although AOL acquired the Huffington Post for $315 million, the company is still on shaky ground. According to WSJ, AOL shares are trading at their lowest levels since the company split off from Time Warner Inc. in December 2009. Shares of AOL were off 34 cents, or 1.8 percent, to $19 in Thursday 4 p.m. composite trading on the New York Stock Exchange. And according to research firm eMarketer Inc., AOL’s ad revenues dropped 26 percent in 2010, while the overall online ad market grew around 14 percent. AOL has steadily lost market share to rivals Google Inc. and Facebook Inc.

AOL CEO Tim Armstrong said he expects AOL’s online advertising business to start growing again during the second half of the year.

“AOL remains in the middle of the disruption that the Internet is causing and we are starting to move from being a disrupted brand to a brand that is leading the disruption,” Mr. Armstrong said in his memo. “The changes we are making are not easy, but they are the right changes for the long-term health of the company, the brand, and for our employees.”

After all is said and done, AOL will employ about 4,000 people. This figure does not include staff that currently work for AOL’s local Patch news sites, which recently hired 1,200 new employees.

  

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