AOL CEO: Layoffs today, bright future ahead

Tim Armstrong promised that 2011 will be the year AOL revenue starts growing again

Despite laying off 20 per cent of the AOL workforce Thursday, AOL CEO Tim Armstrong foresees 2011 as the year that AOL will start to grow again.

The company is in the process of laying off approximately 900 workers, it announced Thursday, the same day Armstrong spoke at the Bloomberg Media Summit, being held this week in New York.

At the conference, Armstrong attributed the layoffs to the changing business model of AOL, which is moving from being an Internet service provider to an ad-driven online content company.

"Today is a very difficult day for the company because people's jobs are impacted," he said.

However, he noted, "we are in a comeback situation and my job and management's job is to stay on top of what we need to do organizationally to change the company, and we're not going to shy away from that."

Despite the fact that the company is laying off personnel, Armstrong expects to be hiring more workers, particularly those in the editorial field.

While once the dominant U.S. provider of dial-up online services and associated services, AOL has floundered badly over the past decade as users gravitated toward broadband providers. For fiscal 2010, the company posted a net loss of $US782.5 million, as well as sinking revenue, from $3.2 billion in 2009 to $2.4 billion in 2010.

The dial-up business still accounts for about 40 per cent of AOL's revenue; AOL still has about 2 million U.S. subscribers to that service. But Armstrong expects that number to decline by 25 per cent to 29 per cent a year. Armstrong sees AOL's focus as providing content and other Web services, and generating revenue by ads that will run alongside these offerings.

To this end, the company recently acquired, for $315 million, the Huffington Post, a Web news site that garners 253 million unique visitors per month.

"The Huffington Post deal for us really was about trying to transition the company to be more of a digital media company," Armstrong said. He noted that, despite its increasing focus on content, AOL still employs largely a technical workforce.

AOL is now combining The Huffington Post operations with all its own media properties, creating a new unit called the Huffington Post Media Group. Huffington Post co-founder Arianna Huffington will lead the new group as president and editor-in-chief, Armstrong said.

Prior to the acquisition, "AOL had roughly 400 content engineers and 400 full-time editorial people internally. That's not [the make-up] of an Internet company. An Internet company has a small number of engineers building something many editorial people can work on," Armstrong said.

Of those being separated from the company in this round of layoffs, about 200 will be editors working in the U.S. media operations, as a result of the Huffington Post merger.

Most of the remaining 700 employees being severed are located in India, where much of the operations will be outsourced. About 300 of these employees may end up going to the outsourcing companies AOL contracts with, where they will continue to work on AOL projects, Armstrong said.

In the months to come, Armstrong is planning to increase the percentage of editorial people on the content group from 51 per cent to 70 per cent. "I think you will see us hire more and more journalists and we will move more from a freelance model to full-time journalists over time. You will see us ramp up hiring in the content space."

Even though the most recent financial results looked dire, the company's fortunes are already on the upswing, he said. Armstrong pointed to a redesign in the AOL portal page as evidence of the change in the company. Previously, users would see around 14 small ads. Those have been replaced by a single ad as a way to entice more prestigious advertisers, he said.

"The revenue mix is much healthier now, compared to what it was a year ago," Armstrong said. "Consumers are getting a much better experience and advertisers are getting a much better experience."

As a result of these changes, he noted that "the company is much healthier now than it was a year ago. And it will be much more healthy by the end of the year."

Join the PC World newsletter!

Error: Please check your email address.

Tags AOLentertainment

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Joab Jackson

IDG News Service
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?