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AOL to Lay Off 1,700 Workers

BY Admin  August 22, 2001 at 12:00 PM EDT

The move is the company’s second major staff cut this year. In January, AOL trimmed around 2,400 positions company-wide following its $106 billion purchase of media conglomerate Time Warner, with 750 of those coming from the online unit.

Before now, the online unit’s largest cut came in April 1999, when 850 staff members lost their jobs after AOL bought Web browser company Netscape.

The current round of layoffs is expected to affect employees and managers at various levels, including AOL’s Web properties and technology development divisions.

Once completed, the cuts will add up to more than 10 percent of AOL’s 16,000 staffers, but only two percent of AOL Time Warner’s 90,000 employees worldwide.

Company officials said 500 of those eliminated came from iPlanet, an alliance between AOL’s Netscape division and Sun Microsystems that develops business software. After the layoffs, AOL will contribute 250 to 300 staffers to iPlanet, which currently employs 3,000.

AOL said the layoffs would cost them as much as $100 million to $125 million in severance packages, stock options and benefits.

So far, the company has not specified exactly from where the cuts would come, but said layoffs would begin this week.

Chief executive Barry Schuler told Reuters the cuts came as part of the company’s continuing examination of the market.

“We are a business that changes every single year. You have to reexamine your priorities,” he said. “Great businesses follow the discipline of scrutinizing the business every single year, making sure it’s right-sized and organized to meet goals and challenges.”

Schuler said the cuts were not an indication that AOL, which has 30 million subscribers, may have trouble meeting its revenue goals or that market competition had increased more than expected.