AOL Cuts 2,000 Employees

AOL is reducing its workforce by 2,000 employees - 1,200 in the United States - as it continues to transition into a provider of free, advertising-driving online services.

Once a towering giant of the online world, AOL has announced to its employees that it is eliminating some 2,000 jobs—1,200 in the United States—as the company continues to transition from a walled-garden to a provider of free, ad-supported online services. The layoffs will impact about 750 employees near AOL’s Virginia location, and the Associated Press is reporting most of the U.S. terminations will be effective tomorrow, while international layoffs will take place over the rest of 2007.

The new layoffs follow a round of nearly 5,000 job cuts a year ago—mainly in marketing and customer service—when AOL first rolled out its free email account service and other online features. Some of the layoffs may be related to AOL’s recent decision to relocate its corporate headquarters to New York City, in order to better pursue its ad-based business model.

In a letter to employees today, AOL CEO Randy Falco positioned the job cuts as a refocusing of the company due in part to employees added on through recent acquisitions. “This realignment will allow us to increase investment in high-growth areas of the company,” wrote Falco, “while scaling back in areas with less growth potential or those that aren’t core to our business.”