TELECOM Digest OnLine - Sorted: AOL Lays Off 750 Employees

AOL Lays Off 750 Employees

Lisa Minter (
Fri, 10 Dec 2004 14:16:21 EST

by Elizabeth Millard, NewsFactor staff writer

Approximately 750 America Online employees, primarily at the company's
Dulles, Virginia, headquarters, have been laid off.

The cuts were expected by many analysts, since AOL had been suggesting
for weeks that it would be realigning the company and shifting some
focus areas.

"Whenever a company demonstrates that it's going to cut costs, you're
probably going to have some job loss," John Challenger, CEO of
outplacement firm Challenger, Gray & Christmas, told NewsFactor.

The latest round of cuts comes a year after the company's last major
layoff round, when 500 employees were let go, mainly from AOL's
California offices.

The new layoffs involved employees from across the company's
operations, but those in the marketing and broadband areas were hit
especially hard, according to news reports. No cuts were made in the
company's call centers.

Employees in Northern Virginia made up the majority of the cuts, but
some workers were laid off from offices in Ohio, California and New

Fresh Strategy

AOL has been trying to change its corporate direction for the past two
years, when it began to see its dial-up business decline.

In response, AOL has noted that it will make up for subscriber loss by
focusing more intently on its free site, beefing it up with
content and games, and hopefully seeing a robust profit from
advertising sold on the site.

In addition to the push to become a major ad-driven portal, the
company has been influenced by SEC scuffles involving its parent
company, Time Warner.

Tough Times

Although AOL's cuts were expected for the past month, they demonstrate
that some job loss gloom has not lifted from the technology sector.

"Cuts in the sector were expected to increase for the fourth quarter,"
said Challenger, adding that aggressive price competition for
manufacturers, developers and service providers has been hurting job

"The most difficult part about these job cuts right now is that
they're not being offset by increased hiring," he said. "That means it
will be some time before we see a good level of hiring and job

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