AOL Begins Swinging Axe In 10% Downsizing

layoffsIn a ritual that has become all too common at the long-ailing Time Warner unit, AOL this week initiated an expected round of layoffs.

The cuts, taking place mostly in Dulles, along with New York and California, were first reported on Tuesday by industry blog Silicon Alley Insider.

An AOL spokesperson on Tuesday said the company had no comment. However, a former AOL employee--who was, in fact, terminated on Tuesday--said the company was indeed in full-throttle downsizing mode.

"This is the beginning of the fruition of it," the former employee said, regarding plans revealed earlier this year by AOL CEO Randy Falco to lay off 10% of the unit's workforce--or some 700 employees.

In a letter sent to employees in January, Falco blamed the layoffs on a worsening economy.

"Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars," Falco said in the letter.

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Few companies have been immune to the present economic downturn. Even Microsoft, which has long resisted massive layoffs, recently announced plans to cut 5,000 jobs--or 5% of its workforce--over the next 18 months.

But, for AOL, such bloodbaths have almost become standard practice. Most recently, it cut some 2,000 jobs worldwide in late 2007.

Falco in January also ruled out "merit raises" this year, and announced plans to reorganize internationally and consolidate office space in Mountain View, Calif. and Los Angeles.

Falco said AOL was "two years into a three-year turnaround plan."

"Since day one, our strategy has focused on building and growing mutually dependent publishing, advertising and social media businesses to take advantage of the shifting media landscape," Falco said. "In addition to focusing our investments, a successful turnaround plan also requires us to realign our cost structure against this three-pronged business model."

Along with a review of its international operations, Falco said that AOL planned to review all of its products and services.

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