- The Washington Times - Thursday, August 3, 2006

AOL LLC said yesterday that as many as 5,000 employees, or about a quarter of its worldwide staff, could be laid off by February as the company overhauls its business strategy to rely more on advertising sales.

“At a company meeting this morning, [AOL Chief Executive Officer] Jon Miller told AOL’s worldwide work force of 19,000 people that within the next six months, it is likely that around 5,000 employees will no longer be with the company,” spokeswoman Tricia Wallace said.

The Sterling-based unit of Time Warner Inc. announced Wednesday it would no longer charge high-speed Internet users for e-mail and other Web products as part of a restructuring plan to beef up online advertising revenues. The company said it would continue to offer dial-up subscription services but would no longer aggressively market them.

The Internet trailblazer that gave millions of Americans their first taste of the Web expects to cut $1 billion in operating costs by the end of next year as the Internet access business takes a back seat to its AOL.com portal offerings.

A source familiar with the restructuring plan said staff at customer-support hubs and employees involved in marketing the subscription services would be the most likely workers affected by the layoffs.

The job cuts will take place around the globe, the source said, but particularly in Europe, where AOL has 3,000 access employees and hopes to divest itself of its access businesses by the fall. When the company finds buyers for its European units, some of those workers probably will keep their jobs under new companies, the source said.

It is too early to tell how workers at the company’s Washington-area corporate headquarters will be affected, the source said.

But “rumors that the Dulles campus is closing are absolutely not true,” the source added.

In May, AOL cut 1,300 customer-service jobs as it closed its Jacksonville, Fla., call center and trimmed its staff at centers in Ogden, Utah, and Tucson, Ariz.

AOL has been losing subscribers steadily as users upgrade to broadband and no longer wish to pay for e-mail and other software they can find elsewhere free of charge.

The company has hemorrhaged 3 million subscribers in the past year — 1 million of which left during the company’s second quarter, which ended June 30.

In a conference call Wednesday, company executives said the new strategy will boost advertising dollars by attracting more visitors to AOL Web pages and keeping current users as they shift to broadband.

The call did not mention job cuts.

Shares of Time Warner lost 2 cents yesterday to close at $16.65 on the New York Stock Exchange.


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