AOL to cut 5,000 jobs

11-08-2006

US-based internet service provider AOL has announced that it is to cut 5,000 jobs, almost a quarter of its international workforce, over the next six months.

The move comes as the internet arm of Time Warner, the world's biggest media company, struggles to boost profits amid falling numbers of subscribers and tough competition from rivals.

AOL said that the losses would form part of a major overhaul of the company's operations, with restructuring costs expected to mount to around $350 million (£185 million) by the end of 2007.

The internet service provider intends to cut operating expenses by $1 billion by the end of next year.

In a statement, AOL confirmed that the company's chief executive Jon Miller had announced the planned redundancies during a webcast yesterday.

"At a company meeting this morning, Jon Miller told AOL's worldwide workforce of 19,000 people that within six months, it was likely that around 5,000 employees would no longer be with the company," the statement said.

AOL has yet to reveal where redundancies will be made, but the announcement comes as the company is in the process of selling its European internet access businesses, with around 3,000 people currently employed across Britain, France and Germany.

Job cuts are also likely in the US, where AOL is planning to stop marketing its dial-up internet access services to focus on broadband products, which will reduce the need to provide technical support to users through customer service centres.

News of the redundancies comes after AOL's parent company Time Warner announced this week that it would offer features such as e-mail and security software free to high-speed internet users, in a bid to boost its dwindling number of subscribers.

Amid increasing competition from rivals, AOL's subscriber base has fallen from 26.7 million to 17.7 million over the past four years, with the company struggling as growing numbers of dial-up customers switch to broadband.


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