AOL/TW to cut another 1,000 jobs
08/20/2001 2:38:28 PM MDT Albuquerque, Nm
By Dustin D. Brand; Owner AMO
It started as 2,400 following the merger, now add another 1,000 to that.
America Online Time Warner is likely to cut another 1,000 jobs from it's "online division".
The combined company, AOL Time Warner cut 2,400 jobs following it's merger. AOL is in fact not immune to the economic downturn, and plans to cut another 1,000 jobs this week.
AOL's advertising income supposedly represents only 25% of it's combined income, but I find this hard to swallow. When the merger with Time Warner was completed - everything changed income wise. Before the merger with Time Warner, AOL built itself, and survived on advertising.
As in print magazines, advertising = survival and profit. Following AOL's merger with Time Warner, the new company is trying to reach $40 billion in revenue and $11 billion in earnings before interest, taxation, depreciation and amortization (EBITDA). This increasingly looks difficult, if not impossible for AOL to reach.
AOL/TW has also recently changed their "free AOL Trial" to 1,000 hours in 45 days in an attempt to regain customers lost to MSN after AOL raised their monthly rates 9% to $21.95. It seems fit for AOL to cut 1,000 jobs while giving 1,000 hours to new trial customers, and this seems a bit ironic.
Will AOL reach it's $40 Billion milestone? Will AOL continue to suffer from lack of advertising income and lost subscribers? AOL is striking back hard with a new advertising campaign (1,000 hours free trial), and a cost of this is 1,000 AOL jobs. AOL can't continue to lead a market where even 25% of it's income relies on advertising when advertising income is scarce.
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