AOL lays off 750 employees - News - Business

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This story was printed from ZDNet Australia.
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AOL lays off 750 employees

By Jim Hu, Special to ZDNet
December 08, 2004
URL: http://www.zdnet.com.au/news/business/soa/AOL-lays-off-750-employees/0,139023166,139172396,00.htm

About 750 employees at America Online were laid off Tuesday in the US as part of the Internet giant's efforts to cut costs and to realign its business units, a company spokesman confirmed.

As previously reported, most of employees laid off worked out of AOL's Dulles, Virginia, headquarters with most departments across the company affected. Tuesday's cuts come one year after AOL laid off about 500 employees, mostly from the company's California offices.

The layoffs come weeks after AOL announced its intention to realign the company to focus more of its resources on the free Web. While the company will continue selling subscriptions for dial-up access and a "bring your own access" product for broadband users, it has formed a new division that will focus on Web programming and content.

The move toward the free Web is an attempt by AOL to chase after the resurging dollars from online advertising. As companies such as Yahoo, Microsoft's MSN and Google continue to profit heavily off commercial search dollars and increasingly display advertising, AOL hopes to get a piece of the action.

The company has little choice but to turn to the Web since subscriber numbers continue to decline. Over the past two years, AOL has lost 4 million subscribers to 22.7 million as of September 30.

On the bright side, online advertising revenues have grown for the past three quarters, fueled largely by a revenue-sharing deal with Google's commercial search business. Earlier this week, parent company Time Warner's CEO Richard Parsons said AOL's online advertising would reach nearly US$1 billion in 2004, up 33 percent from last year.