SALON

Thursday, Mar 10, 2011 10:01 PM UTC

AOL cuts 900 jobs worldwide

The Internet monolith axes 20% of its workforce as Arianna Huffington takes over editorial control

By and

Topics: Internet Culture,

AOL cuts 900 jobs worldwideFILE - In this July 8, 2010 file photo, AOL Chairman and CEO Tim Armstrong talks on the phone as he walks to a morning session at the annual Allen & Co. media summit in Sun Valley, Idaho. Online company AOL Inc. is buying online news hub Huffington Post Monday, Feb. 7, 2011, in a $315 million deal that represents a bold bet on the future of online news.(AP Photo/Nati Harnik) (Credit: AP)

AOL said Thursday it will slash 900 jobs worldwide, or nearly 20 percent of its work force, partly to eliminate overlap that stems from its recent purchase of The Huffington Post.

About 200 of the cuts are from AOL’s content and technology departments in the U.S. The remaining 700 are at AOL’s offices in India, which mainly provide back-office support to the U.S. But AOL spokesman Graham James said 300 of those will move to other companies, which are taking over support functions.

Thursday’s cuts leave AOL with 3,500 employees in the U.S. and about 500 overseas. The total work force is a fifth of what the company had at its peak in 2004, when its staff numbered more than 20,000. The company pared thousands of workers in the years leading up to its separation from Time Warner Inc. in late 2009. After the companies broke up, AOL cut about 2,300 of its then-6,900 employees — or about a third of its work force — through layoffs and buyouts.

In the ’90s, AOL was the king of dial-up Internet access, known for its ubiquitous CD-ROMs and “You’ve got mail” greeting in its inboxes. The company even managed to buy Time Warner at the height of the dot-com boom in 2001. But the companies never successfully melded, and as consumers moved to faster Internet services from cable and phone companies, AOL’s main source of revenue dwindled.

Over the past several years, AOL has struggled to reinvent itself as a company focused on advertising and content, operating a variety of websites such as the popular tech blog Engadget. Since CEO Tim Armstrong was lured from Google Inc. to take the helm of AOL in April 2009, AOL has focused increasingly on the market for local content, helped by the purchase and expansion of its network of Patch local news sites.

The company has continued to acquire sites, too: Most recently, it paid $315 million for The Huffington Post as part of its efforts to become a go-to source for news and other content. That deal closed Monday.

Armstrong, speaking at a conference in New York, said the company has no immediate plans for further layoffs. But he added, “in our situation we don’t have the luxury of long-term planning.”

Armstrong said AOL will hire this year and will try to have more full-time journalists in its ranks to rely less on freelancers. He said about half the employees now have content-producing roles, and he wants to increase that to 70 percent.

Armstrong maintained his confidence about AOL’s prospects for a comeback.

“AOL will turn around,” he said. “No doubt about that.”

But AOL’s revenue is contributing less and less to the overall online advertising market in the U.S., eMarketer Inc. analyst David Hallerman said.

“If they’re going to succeed, they’re going to be succeeding as a smaller company,” he said. “Therefore their success won’t be as big.”

Although Hallerman said he sees promise in the company’s efforts to establish itself as a local content provider, he said the ads that run on these sites bring in less revenue than those on its more popular websites. That means AOL will have to make that up by drawing a lot of traffic.

Clayton Moran, an analyst with The Benchmark Co., said that the changes made since Armstrong took control are sensible and probably the best route the company could take.

But he said the changes “haven’t shown a lot of financial progress. It’s taking time for the changes to have an impact.”

Shares of AOL fell 4 cents to $19.30 in afternoon trading Thursday.

——

Rachel Metz reported from San Francisco. AP Technology Writer Peter Svensson contributed to this report.

More Rachel Metz.

More Barbara Ortutay.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 6 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: Chekhov's story mirrors Russia's own

Recommendations