AOL to lay off more than 1,000 workers this week

By Mike Musgrove
Washington Post Staff Writer
Tuesday, January 12, 2010

AOL said Monday that it plans to lay off more than 1,000 workers this week, as the company continues efforts to restructure as a Web content publisher.

Most of the layoffs will take place on Wednesday, the company said.

In November, AOL announced a "voluntary separation program" under which employees were encouraged to take a buyout worth between three and nine months of pay, depending on the employee's position. The offer had more than 1,000 takers, but not enough to hit the company's target of shedding one-third of its workforce, or about 2,500 people. A company spokesman declined to say how many would be losing their jobs at the Dulles campus.

Alysia Lew, director of corporate communications, characterized this week's layoffs as the "completion of phase one of AOL's turnaround" as the company focuses on becoming a publisher of Web content, including news blogs such as Engadget and Politics Daily.

"We evaluated our competitive position and product portfolio in every market, and we asked the hard questions about areas that were no longer core to the strategy and our profit profiles in the businesses and countries where we operate," she said.

AOL has said that it expects to incur costs of $200 million during the latest round of restructuring, but will save $300 million in annual operating expenses as a result. As part of the cost-cutting measures, Lew said the company would shut down many offices in Europe, beginning with locations in Spain and Sweden.

"This is a large behemoth trying to reposition itself as a smaller, more agile player in the online publishing space," said Scott Steinberg, an analyst with the media research site Digital Trends. While AOL has retained some of the large corporate structure from its days as a dial-up Web service, he said, its competitors today include tiny outfits such as Mashable, a popular social media news site that employs just a dozen people.

"The big question is whether AOL is going to be able to adapt fast enough," he said. "No one can say whether this is going to herald a brave new era for AOL."

The layoff announcement came almost exactly a decade after AOL's much-criticized merger with Time Warner, a corporate marriage that ended in December. Since launching as an independent, publicly owned company, AOL's stock has been trading near $26.

© 2010 The Washington Post Company