AOL to cut workforce by one-third

AOL, a titan in the Internet world, is about to shrink. As part of its spinoff from Time Warner, the company announced last week that it is cutting its workforce by eliminating 2,500 workers--one third of the work force.

The cuts are meant to save about $300 million a year, according to AOL. Before layoffs begin, AOL said it would first ask for volunteers. AOL had more than 20,000 employees in 2004, but it has been steadily cutting back. It currently has about 6,900 and after the latest round of layoffs will be left with about 4,400 workers, according to the Wall Street Journal.

Tim Armstrong, AOL's new chairman and chief executive, told employees in an email message last week that he would not take a bonus this year. He had been guaranteed a bonus of at least $1.5 million a year, according to an AOL regulatory filing. His yearly salary is $1 million.

That announcement comes at a time when AOL's revenue is down in the most recent quarter by 23 percent--or $235 million. It's now time for AOL to reinvent itself. It will be a steep climb for the company that represented the new age of the Internet in the 1990s.

For more on AOL:
- see this Wall Street Journal article

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