AOL To Cut 5,000 Jobs Worldwide

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The New York Sun

Time Warner Inc., the world’s biggest press and broadcasting company, plans to eliminate 5,000 jobs at AOL, or 26% of the Internet unit’s worldwide workforce, to help revive profit and sales after four years of subscriber losses.

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. 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’s 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’s 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.

Mr. 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.

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 Britain 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 American 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.


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