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Sat, Aug 05, 2006 - Page 10 News List

AOL to sack up to one-fourth of staff worldwide


Time Warner's struggling Internet unit AOL said on Thursday it was likely to lay off about 5,000 employees, or a quarter of its global workforce, in the next six months.

The announcement came just a day after AOL said it would start offering its e-mail and multimedia services to broadband users for free, as part of a drive to compete better with Yahoo and Google.

What was once the Internet's dominant player had only just announced 1,300 layoffs in May, mainly at its customer call-centers, as it vies to shore up its dwindling market share.

"It's likely that within six months, 5,000 employees will no longer be with the company any more," AOL spokeswoman Tricia Primrose Wallace said.

The company employs some 19,000 people around the world, primarily in the US, including about 3,500 employees in Europe.

The spokeswoman declined to elaborate on a webcast announcement made to staff by AOL chief executive Jonathan Miller, saying more would be known next month.

But she said the job cuts are "100 percent aligned with the strategy AOL announced on Wednesday," and that the company is focused "on growing our audience and on growing the advertising part of our business."

Users have been deserting AOL's fee-paying service for dial-up Internet access. More than 3 million users dropped the service in the quarter to June, abandoning AOL's snail-paced access speeds in favor of broadband.

Time Warner said on Wednesday that as a result, AOL's subscription revenues from fixed-line Internet access had plummeted 11 percent in the quarter from a year ago.

AOL also announced that it had entered into exclusive talks with French telecoms group Neuf Cegetel to sell its French Internet interests by the end of the year.

AOL's French operations include about 500,000 broadband subscribers and about the same number of dial-up users. The company employs some 500 workers at a Marseille call-center.

AOL said it would continue to offer its dial-up subscription service, "but will no longer aggressively market it."

Rivals Yahoo, Google and Microsoft's MSN offer free e-mail and content in a bid to entice users to their portals to maximize their advertising revenues, a strategy AOL now aims to emulate. It is striving to become the leading portal for a range of Internet services, including instant messaging, ads, paid searches and entertainment.

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