- The Washington Times - Wednesday, August 22, 2001


AOL Time Warner Inc. said yesterday it plans to cut another 1,700 jobs, or 1 percent of its work force, as it reorganizes America Online and copes with an advertising downturn.
About 1,200 jobs will be eliminated at AOL, based in Sterling, Va., and 500 will be cut at the Netscape venture with Sun Microsystems Inc., the company announced late yesterday.
The cutbacks will result in a charge against earnings of $100 million to $125 million in the third quarter. It was the second wave of job cuts at the unit since its merger with Time Warner closed in January.
Barry Schuler, chief executive of America Online, said the revamp would split AOL into two main units, one focusing on Web brands and another on the AOL service.
"If you look at the market overall, half of the consumers buy AOL and want the packaged offering, the other half is going into the Web and doing their own thing," he said.
Mr. Schuler said the revamp was driven mainly by a need to streamline AOL's internal structure and also to integrate the unit with the rest of AOL Time Warner and to respond to a slower market for online advertising.
"We've grown a lot from acquisition," he said. "We're eliminating a lot of duplication in management and infrastructure… . This is something we do every year. What you focused on last year changes next year. If you're not constantly re-evaluating your business, you can't be a leader."
AOL cut 725 positions in January, shortly after the deal between AOL and Time Warner closed, as part of a companywide shake-up that cost more than 2,000 jobs.
As part of the new organizational shake-up, the company will create one division that groups all of AOL's Web brands such as Netscape, CompuServe and Moviefone. It will be headed by Jim Bankoff, the current head of Netscape, and coordinate the online activities of other parts of AOL Time Warner properties such as People magazine and CNN.
The other part will deal with delivering electronic services and will be headed by Jonathan Sacks, currently head of the AOL service.
The company also has created an integrated division to sell advertising and marketing services across AOL's brands and properties.
AOL Time Warner's second-quarter sales fell about $500 million short of analysts' forecasts, and the company said its forecast for $40 billion in 2001 sales was now at the "top" of the range.
AOL Time Warner shares fell 31 cents to $39.90 yesterday on the New York Stock Exchange. The company's stock has dropped 30 percent in the last year.

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