After announcing a spin-off from parent company Time Warner on Monday, AOL is moving to reduce its head count about one-third. AOL is looking for employees who are willing to resign from their jobs at the once-dominant Internet firm.
As part of a voluntary layoff program that will begin Dec. 4 and run through Dec. 11, AOL will accept up to 2,500 resignations. That would shave about 30 percent of its 6,900 employee base -- if the packages are healthy enough to convince employees to quit their jobs in the midst of a recession.
"We will need to do an involuntary layoff if we do not reach the target numbers through the voluntary option," said AOL spokesperson Tricia Primrose. "We believe the voluntary program gives people more choice and decision-making ability instead of waiting for the final cost recommendations and involuntary layoffs."
Trimming Fat -- or Muscle
AOL's costs will decline with the job cuts, but there is no guarantee the layoffs will translate directly to an improvement in the company's market position, according to Greg Sterling, principal analyst at Sterling Market Intelligence.
"AOL is getting rid of what they perceive to be fat. But if you are asking people to voluntarily resign, then you are not necessarily getting rid of fat," Sterling said. "You may be losing some good people who decide it's not going to be worth it to be there."
As Sterling sees it, AOL has a lot of assets, but also a lot of challenges. The company needs to figure out its role, how it is different from Yahoo, and how it is going to compete and when. Those are the questions that AOL is must answer, Sterling said.
The layoffs aren't unexpected. When Time Warner first announced plans to spin off AOL, a company it acquired in 2000, Time Warner Chairman and...

More...