AOL Cuts 700 Jobs

America Online Inc. (AOL) has cut more than 700 employees, or about 4 percent, from its workforce of nearly 20,000 employees, a company spokesman said Wednesday.

Most of those losing their jobs worked in providing support to AOL members, whose numbers have been decreasing. For example, as of March 31, 2005, AOL had 21.7 million U.S. subscribers in its fee-based service, down 2.3 million from the same period in 2004 and down 4.5 million from the first quarter of 2003.

The cuts respond to AOL’s “ongoing process to better align our resources and continue to respond to a changing marketplace,” said AOL spokesman Nicholas Graham, reading from a prepared statement. “As a result of these structural and strategic transformations, we believe AOL to be better positioned to remain flexible and competitive in the market, thus enabling us to expand existing audiences, and reach new ones, online.”

Graham declined to be more precise when asked for a specific number of layoffs and whether the figure was closer to 700 or to 800 jobs. A 4 percent cut from a workforce of exactly 20,000 would mean that 800 jobs were lost.

AOL has been shifting its business strategy away from one focused on generating revenue from subscriber fees to one focused on generating revenue from online ads. In an effort to achieve this, the company has been beefing up its public, free Web portal AOL.com with content and services previously available only to its paying subscribers.

AOL, a Time Warner Inc. unit, has been reportedly in recent weeks in talks at different times with Google Inc., Microsoft Corp. and Yahoo Inc. over those companies’ reported interest to acquire all or part of AOL. The reports, by various media outlets including The Wall Street Journal and the New York Times, have been based on information provided by anonymous sources.

By Juan Carlos Perez, IDG News Service