AOL Layoffs

There are almost certainly large layoffs coming at AOL.

in connection with the company’s pending spinoff from Time Warner , AOL said it expects to take $200 million to cover “additional restructuring activities,” with all of the hit coming from from the date of the spin through the first half of 2010.

Here’s the key paragraph from the filing, which suggests that the restructuring moves the company has made so far pale compared to whatever it has in mind in the months ahead:


We undertook various restructuring activities in the first nine months of 2009 in an effort to better align our cost structure with our revenues. As a result, for the three and nine months ended September 30, 2009, we incurred restructuring charges of $10.2 million and $82.9 million, respectively, related to involuntary employee terminations and facility closures. We currently expect to incur up to $20 million of additional restructuring charges through the spin-off, which is anticipated to occur in the fourth quarter of 2009. Shortly after the spin-off, we plan to undertake additional restructuring activities to more effectively align our organizational structure and costs to our strategy. We are also evaluating the countries in which we operate as part of the effort to align our cost structure, and we may decide to cease or reduce operations in certain countries. In connection with these additional restructuring activities, we expect to incur additional restructuring charges of up to $200 million, substantially all of which is expected to be incurred from the date of the spin-off through the first half of 2010.

AOL recently cut 100 jobs, and that 1,000 or more additional cuts could lie ahead.

Why Delay AOL Layoff

Everyone knows Tim Armstrong is planning more layoffs at AOL once the company is spun off from Time Warner. So why let them hang over the company's return to the markets as an independently-traded stock?
Armstrong, the former Google advertising chief (pictured), jettisoned some top lieutenants from AOL, the internet conglomerate, last month. Beyond that, he's believed to be planning major job cuts as part of a sweeping reorganization of the company. "AOL is not going to change itself by incremental movements," Armstrong recently told PaidContent. Asked if this meant "large cuts," he talked about going "deep into the employee organization... to come up with ways to structure the company... I would expect announcements about that by early next year."
Early next year would mean just after the spinoff from Time Warner, assuming it goes forward as expected late this year. An AOLer who attended a recent internal "Town Hall" meeting on the restructuring, dubbed Project Everest, confirmed the layoffs are planned for post-spinoff.
One explanation we've heard for that timing is that Time Warner CEO Jeff Bewkes didn't want layoffs taking place while AOL was part of his company. That makes some sense — layoffs typically carry a price tag, and Time Warner presumably doesn't want to take the hit for a move that will benefit another company over the long term. Time Warner isn't taking on debt as part of the transaction, our AOL tipster said, which jibes with the media conglomerate's statements that it is AOL that might load up on debt as part of the spinoff.
But a delayed deep restructuring means uncertainty for investors considering what to do with AOL shares in the earliest days of tradubg, which in turn means a potentially depressed price. A weak re-debut for AOL shares would not bode well for a company that has already had more than its share of struggles. Then again, if anyone can sell uncertainty, it's a consummate salesman like Armstrong.

AOL Layoffs

Once the cornerstone of a booming local tech economy, AOL executed its second major round of layoffs in two years amid a weakening market. AOL is shedding 10 percent of its workforce by the end of this month.
Officials would not comment on the matter or put a number on how many workers at the Dulles campus lost their jobs yesterday, but AOL has said that it has plans to reduce its domestic headcount by 700 people. More cuts may be on the way; the company intends to finish the current round of layoffs by the end of March.

The tech sector has sometimes been thought of as immune to economic woes suffered by other industries, but the past few weeks have dispelled that notion as giants such as Microsoft, Intel and Dell have handed out pink slips to thousands of workers.

Yesterday's cuts at AOL followed an internal announcement by chief executive Randy Falco that such a move was on the way.

"The deepening economic recession has affected every corner of the economy, including our own," he wrote in a memo that was e-mailed to AOL employees in January. "Reducing our workforce is never easy, particularly in the current climate, but our goal in doing this is to provide our core businesses the resources they need to thrive."

Several dozen laid-off AOL employees gathered yesterday afternoon at Clyde's Willow Creek Farm in the Ashburn area. A collection of computer programmers, administrators and other office personnel exchanged phone numbers and asked former co-workers to keep in touch via the networking Web site, LinkedIn. Business was brisk at the bar, waiters said.

Many of the axed employees said they weren't given an estimate on how many people were let go or what departments were affected. One former employee said he didn't even know how many people in his division were now jobless.

"If there was a number, we wouldn't know it," said the former worker, who spoke only on condition of anonymity. "No one saw this coming."

The company was once famous for its popular dial-up Internet connection service, and in recent years it has tried to reposition itself as an advertising-supported Web services business with an acquisition last year of the social networking service Bebo, which claims 40 million users. Facebook, by comparison, has more than 155 million users.

AOL's first round of large-scale layoffs came in 2007, when the company cut 20 percent of its worldwide workforce of 10,000 people.

One analyst said yesterday that he was surprised that this year's 10 percent workforce cut wasn't even deeper.

"AOL isn't a leading-edge company anymore, and they're saddled with an old business that inhibits their ability to move into new areas," said Roger Kay, president of Endpoint Technologies Associates. "They'd like to be a portal, sort of like Yahoo, but they haven't been able to do that very well."

Affected AOL workers were e-mailed Monday afternoon that they needed to attend an "important meeting" the next day. In a comment posted to The Washington Post's Web site yesterday, one reader said her husband had been laid off from the Dulles office.
"We knew about it last night because the night before a layoff, AOL sends affected employees an email saying that they must attend a mandatory HR meeting the next day," she wrote. "He was given 2 months severance and 2 months free COBRA. He worked for AOL for 15 years."
Source: Washington Post