New York — The American internet service provider AOL plans to shed 5,000 employees, amounting to almost a quarter of its global workforce, as it goes through a radical restructuring intended to reinvent the business in the face of falling subscribers. AOL's parent company, Time Warner, is taking drastic action to turn the business around and announced this week that it would be making features such as email and instant messaging free.
In a statement, the company disclosed the scope of the job losses involved in the overhaul: "At a company meeting this morning, Jon Miller [AOL's chief executive] told AOL's worldwide workforce of 19,000 people that within six months, it was likely that around 5,000 employees would no longer be with the company."
AOL gave no details of which departments would bear the brunt of the departures, although it is in the process of selling its European internet access businesses, which operate in Britain, France and Germany and employ about 3,000 people. Other reductions are likely to be made as AOL stops actively marketing its dial-up internet access in the US to concentrate on broadband. This will reduce the need for customer service centres and for technical support. AOL's new direction will mean restructuring charges of $350m (£185m) by the end of 2007. The company has said it intends to cut $1bn of operating expenses by the end of next year.
Once regarded as being at the cutting edge of online access, AOL has struggled to keep up with competitors and its subscriber base has fallen from 26.7m to 17.7m over the last four years. It has especially struggled as internet users migrate to broadband. By offering features such as "aol.com" email addresses free, AOL hopes to attract more users and hence more advertising.
source: http://business.guardian.co.uk/story/0,,1836970,00.html 3aug2006
New York — Time Warner Inc., the world's biggest media company, plans to eliminate 5,000 jobs at AOL, or 26 percent of the Internet unit's worldwide workforce, to help revive profit and sales hurt by a dwindling subscriber base.
AOL Chief Executive Officer Jonathan Miller told employees in a Webcast the cuts will take effect within six months, John Buckley, a spokesman for Dulles, Virginia-based AOL, said in an interview. The company has a workforce of about 19,000.
AOL has announced about 7,000 job cuts since late last year to save money as it loses subscribers. Time Warner yesterday said it will offer AOL's e-mail and security software to high-speed Internet users for free early next month. Time Warner President Jeff Bewkes said AOL earnings this year will be unchanged even as sales drop. Profit will begin to grow again in 2007, he said.
``Yesterday they laid out the strategy and today they began its execution,'' said James Goss, an analyst at Barrington Research Associates Inc. in Chicago, who rates Time Warner shares ``outperform'' and owns them in a retirement account. ``The job reduction is the byproduct of their decision.''
Time Warner CEO Richard Parsons, 58, is betting on the free service offer to attract users to AOL's Web site and grab a bigger share of the online advertising market.
Bewkes, 54, said yesterday the company will cut $1 billion in expenses at AOL by the end of 2007. The strategy will cost $150 million to $200 million in restructuring costs this year.
Shares of New York-based Time Warner fell 2 cents to $16.65 at 4 p.m. in New York Stock Exchange composite trading. They have lost 4.5 percent this year.
European Units
The job cuts include positions at units that AOL plans to sell in Europe.
AOL is in exclusive talks to sell its French Web access business to broadband provider Neuf Cegetel, Miller said yesterday. Neuf Cegetel was formed last year by the merger of the fixed-line telephone and Web unit of Vivendi Universal SA and its French rival, Neuf Telecom.
AOL is also in discussions to sell its Internet access units in the U.K. and in Germany, Miller said. The company employs about 3,000 people in its European Web access units.
An Internet pioneer founded in 1985, AOL lost 9 million U.S. access subscribers in four years as users moved to faster broadband service from dial-up and got free e-mail from companies such as Yahoo! Inc. and Google Inc.
Second-quarter revenue at AOL fell 2.4 percent to $2 billion and operating income declined 4 percent to $505 million, Time Warner said yesterday.
AOL had 17.7 million U.S. subscribers, a third of whom are broadband users, at the end of June. That's down from a peak of 26.7 million in 2002. In Europe, AOL lost 517,000 subscribers in a year, bringing the total to 5.6 million.
source: http://www.bloomberg.com/apps/news?pid=20601087&sid=a2xG9ZkDxDt4&refer=home 3aug2006
NEW YORK - Time Warner Inc.'s <TWX.N> AOL online division said on Thursday that some 5,000 workers, or about a quarter of its staff, would no longer be on its payroll within six months as part of a restructuring that includes selling its European Internet access businesses.
"At a company meeting this morning, Jon Miller (AOL's chief executive officer) told AOL's worldwide work force of 19,000 people that within six months, it was likely that around 5,000 employees would no longer be with the company," an AOL spokesman said on Thursday.
AOL said on Wednesday on a conference call that it has a new strategy to boost online advertising sales by offering its e-mail and other Web services for free. It said it would continue selling dial-up Internet access, but would no longer market those services.
The one-time king of the online world said it expects to book restructuring charges of up to $350 million by the end of 2007. It also plans to cut more than $1 billion in operating expenses in 2007.
AOL, which said during the call that it expected to reach deals to sell its European Internet access businesses by the autumn, employs about 3,000 people in its access business in Europe, said one source who was on the call and asked not to be named.
AOL said on Wednesday that it entered into exclusive negotiations to sell its France-based access business with Neuf Cegetel, France's second-largest fixed-line telecoms provider. The deal could fetch about $384.1 million, sources have said.
Sources have said that AOL is in discussions in Britain with a round of bidders including BSkyB <BSY.L>, Carphone Warehouse <CPW.L>, and France Telecom's <FTE.PA> Orange unit to sell its access business in Britain.
Bidders for AOL's German unit include Versatel <VERS.AS>, freenet.de <FRNG.DE>, United Internet <UTDI.DE>, Telecom Italia <TLIT.MI>, and KPN <KPN.AS>, several sources close to the sale process have said.
Other employees affected by the restructuring are likely to be workers who market the Internet service business and customer service representatives, said one source with knowledge of the plans.
source: http://www.washingtonpost.com/wp-dyn/content/article/2006/08/03/AR2006080300745.html 3aug2006
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