It's been a long time since AOL was considered a serious competitor to Microsoft or Yahoo. The company has never been a threat to Google. I would say today's announcement of 2,000 staff cuts marks the end of an era, but I think that already happened.
Paring 2,000 from a workforce of 10,000 is significant, but it isn't enough. According to a staff memo by CEO Randy Falco, the layoffs will help the company continue its massive push into online advertising. AOL changed its strategy in August 2006 to focus on advertising and move away from the subscription Internet access business. The company has been slashing jobs since 2001, when it had 18,000 employees.
Certainly the cuts were necessary. In August, Time Warner pulled back its ad growth forecasts for the year. Its Q2 ad sales grew by only 16%, down from 40% for four previous quarters. And on the Internet access side, AOL lost 1.1 million paying subscribers. A lot of lines are trending down at AOL, and a massive layoff will help reverse that
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