Time Warner’s AOL Unit Cuts 750 Jobs

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Time Warner Inc.’s America Online division, the biggest American Internet service, said it cut 750 jobs, or about 4% of its workforce, amid subscriber losses.


Half of the reductions are in Dulles, Va., where America Online is based, a spokesman, Jim Whitney, said yesterday.


The rest are in California and Ohio. America Online has about 20,000 employees. The company is cutting in most departments, including in software development and marketing, he said.


The online service of the world’s largest publishing and broadcasting company has lost customers for seven consecutive quarters as more Web surfers access the Internet through high-speed connections offered by cable and telephone operators such as Comcast Corporation and Verizon Communications.


On November 3, New York-based Time Warner said America Online was “undertaking efforts to realign its resources,” which may cost about $50 million in the fourth quarter and the first half of next year.


America Online as of September 30 had 22.7 million customers in America. Last quarter, the service lost 646,000 dial-up subscribers and lured 470,000 to sign up for a more expensive broadband product that offers faster connections and more features.


Time Warner is shaking off the effects of its $124 billion acquisition by America Online in 2001.Shares of Time Warner have lost 60% of their value since then, and Stephen Case is the only America Online executive left on the company’s board.


Shares of Time Warner rose 2 cents to $18.21 at 6 p.m. in New York Stock Exchange composite trading. The stock has risen 1.2% this year.


The Washington Post on November 2 reported Time Warner was planning to fire more than 700 workers this month. America Online cut 450 employees, or 2% of its staff, a year ago.


Time Warner’s chief executive, Richard Parsons, said yesterday at UBS AG’s media conference in New York that owning America Online was an “opportunity to benefit from the fast growth Internet sector.”


Revenue at America Online rose 1% to $2.1 billion in the third quarter, helped by the purchase ofAdvertising.com, which helps companies plan and track Internet-based marketing campaigns. America Online’s advertising sales will reach about $1 billion in 2004, Mr. Parsons said yesterday.


The unit’s dial-up subscribers pay $23.90 a month. Its broadband service costs $14.95 a month, and customers must pay for their own high-speed access to the Internet.


Time Warner may pay as much as $500 million to settle U.S. government investigations into whether it improperly booked advertising sales at America Online, people familiar with the matter said last month.


On November 3, Time Warner said it had set aside $500 million to cover anticipated costs of settling the SEC probe and a parallel U.S. Justice Department investigation. The money may also be used to cover shareholder suits, the company said.


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