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The First Cut Is The Deepest: AOL Axe To Fall Harder Than Expected

As part of its broader cost-cutting initiative, AOL was expected to ask a few good employees to step forward and take one for team. Exceeding the most aggressive estimates, however, CEO Tim Armstrong told employees Thursday morning that he's looking for "up to 2,500 volunteers" to soon quit or commit to early retirement. Putting that number into perspective, its represents a whopping third of the soon-to-be-independent company's payroll.

"This is lousy news for employees, who are faced with a 'jump now or wait to be pushed' decision, but it is designed to cheer investors," writes MediaMemo. "AOL says the cuts will drop its annual operating expenses by $300 million."

Just in time for the holidays, the voluntary layoff program is slated to begin on December 4 -- a few days before the company plans to spin off from Time Warner.

"Ok, so in this crappy job market you are asking someone to either volunteer to move on or just wait and see if they will be told to move on," writes Marketing Pilgrim. "What I didn't see was what would make that kind of move better than rolling the dice and hoping that you don't get axed?"

"Interestingly, rank and filers are being offered a weaker deal than their recent colleagues over at Time Inc." notes Valleywag. AOL will pay them three months severance, whereas Time Inc.-ers get that plus two weeks for every year of service ... Apparently unions are nice things to have in situations like this."

Last month, news broke that AOL had hired consultants Alix Partners to orchestrate the company's broader layoffs. A knowledgeable source told The Wall Street Journal's Business Insider blog that Alix was helping AOL with a "top to bottom" look at the company in terms of "process efficiencies, cost structure, and strategy," but had yet to come up with an exact number of layoffs.

Separately, in an effort to offload some unwanted assets, AOL has hired bankers to sell off its ICQ messaging service, and is "considering" dropping MapQuest and other properties, according to MediaMemo.

In late May, Time Warner's board of directors authorized plans to spin off AOL as an independent, publicly traded company by the end of the year




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