According to a Reuters story based on an internal memo, AOL will trim some 2,000 positions starting tomorrow. Job cuts at the Time Warner Inc. (NYSE: TWX) unit have been rumored for some time.
If this number of cuts is accurate, it will represent roughly 20% of the unit's global workforce. Reuters is saying the cuts will be spread out over the United States and Europe. It also notes that spending will increase in higher growth areas, such as advertising.
It looks like AOL is trying to make its operations run much leaner ahead of what very well could be an independent, or partially independent, AOL stock. Time Warner already has a tracking stock for its cable unit, and a separate AOL tracking stock would give it a currency that could be used to make acquisitions or do strategic deals that wouldn't rely solely upon cash outlays. Part of AOL's year and a half old deal with Google Inc. (NASDAQ: GOOG), in which the search giant bought a 5% stake for a $1 billion investment, requires some sort of liquidity event, but any amendments to original terms could change that.
AOL already switched to a free service a year ago, except for the old customers who just won't stop using their dial-up access. That move already resulted in job cuts. AOL is also in the process of moving its headquarters to New York City to be closer to advertising customers. We'll have to see where the actual cuts in this mega-round of layoffs come from before any verdict can be made.
Jon C. Ogg produces the Special Situation Investing Newsletter for 247WallSt.com; he does not own securities in the companies he covers.
AOL to cut thousands of jobs starting on Tuesday
Posted Oct 15th 2007 11:50AM by Jon Ogg
Filed under: Google (GOOG), Time Warner (TWX)
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Reader Comments (Page 1 of 1)
10-15-2007 @ 12:20PM
Greg said...
AOL just simply sucks period. If it wasn't for the fact that I enjoy their email format I would cancel everything with them. AOL has been a headache from day one. It has to be the lousiest software ever created!! More errors and downtime than it actually works. And what the hell is with this new welcome screen that doesn't want to load? WTF????? And the new AOL looks just like the old Yahoo. WTF is up with that?
10-15-2007 @ 12:27PM
JEFFREY TOBIAS said...
AOL,for dial-up,i have,is only 9.95 a month,and it works great,and its not slow,because my fragmentation,and conmfigurations,and my new anti-virus shield,i bought,attacks viruses,and my computer runs as as fast as ,broadband.
10-15-2007 @ 12:31PM
kerrmammoth said...
Time Warner Cable isn't a tracking stock.
Its a separately traded entity for the 16% that Time Warner Inc doesn't own.
10-15-2007 @ 7:30PM
BrRoNs said...
AOL is simply trying to delay the inevitable, that is that the company is so far behind its competition that is nearly impossible to catch up. Look for Time Warner to unload AOL before the end of the year, early next year at the latest. Buyers for AOL? Well, I think it would be a mistake, but I keep hearing Yahoo!'s name mentioned http://www.newsvisual.com/newsvisual/2007/09/post.html
10-17-2007 @ 10:43PM
Chris Austin-Lane said...
I used to work at AOL, and they have layoffs every single fall. Always different reasons, but that is how they a) stay like they look profitable or growing enough for analysts, and b) fire people without having to worry about a cause. Some years it's more and some years it's less, but they hire in between. All the smart people from AOL are working at Google anyways already :)
12-18-2007 @ 5:48PM
John Huckleberry said...
To many people blame AOL when in fact Time is to blame. AOL was set to go free before Time Warner bought in. Time kept changing AOLs business model so that it never had a change to survive. AOL has lost almost 30 million members since Time came in. AOL member 18 years. I know the real history...