America Online (AOL) is one of the oldest internet providers
and once enjoyed widespread market dominance during the early 14.4k - 56k
internet days. The company, however, has aged less than gracefully and
has struggled to keep up with modern technologies and internet trends.
Part of what had brought it success made it become the bunt of many jokes -- its
viral marketing, which included distributing free copies of its software at
stores and in magazines. The software originally was made available on floppy
disks and later on CDs, which frequently have been used as saucers by
enterprising college students.
Now to cope with its struggles AOL is looking to trim some fat by cutting 20
percent of its workforce -- a cut of about 2,000 employees total. U.S.
employees account for 1,200 of the employees losing their jobs, or about 60
percent of the cut. At AOL's Dulles, Virginia headquarters 750 employees
are being cut.
AOL CEO Randy Falco sent its employees a "layoff letter" explaining the cuts to them,
and how when he came to AOL he felt forced to make some significant changes in
order to save the company. Pink slips will begin arriving today, and will
continue for several months.
"Everyone impacted by this reduction deserves our thanks and respect for
their contributions to the company,” said Falco. “We will aid these individuals
in their transition to new opportunities as much as possible, most importantly
with what we believe are generous severance packages."
AOL's cut is not its largest in recent history -- it had
previously cut 5,000 employees last fall representing a 30 percent reduction in
Falco counters in the letter that AOL has also added "many"
employees, though he does not mention how many. He also points to AOL's
acquisitions of AdTech, Third Screen Media and TACODA as signs of a turnaround.
Though not mentioned in the letter, ABC recently agreed to air its television
content live on AOL Videos, as reported by DailyTech. AOL is looking to make the difficult transition from a
company whose primary revenue was as a service provider to a company with
mainly advertisement driven revenue.
"To where is this taking AOL? Put simply, my vision for AOL is to build
the largest and most sophisticated global advertising network while we grow the
size and engagement of our worldwide audience,” Falco continued. “We’re
only a year and a month into our transformation, and the turnaround has been
dramatic. We're now in a position to win as an advertising-supported
However, many analysts believe that Time Warner, the owner of troubled AOL, will
pull the plug and put the company up for sale soon if the outlook does not