* AOL will cut more than 900 jobs - source
* To cut 200 jobs in U.S., 400 in India
* To outsource additional 300 jobs in India
(Adds CEO comment, more details)
By Kenneth Li and Supantha Mukherjee
NEW YORK/BANGALORE, March 10 AOL Inc AOL.N
will cut more than 900 jobs, or nearly 20 percent of its global
workforce, as it struggles to catch up to Google Inc (GOOG.O)
AOL, which has 5,000 workers, will cut about 400 jobs in
India, outsource another 300 there, and eliminate 200 jobs in
the United States, a source close to the company said.
Once known as the training wheels of the Internet for tens
of millions of people, AOL had more than 20,000 workers at its
But since the 2001 takeover of Time Warner Inc (TWX.N) and
its spin off in 2009, the AOL saga has been one of precipitous
decline as generations of Web start-ups overtook the once
mighty giant. Zynga, the privately held social games company,
said on Thursday it planned to double its staff to 200
employees in India. [ID:nL3E7EA1H7]
"We want to run a profitable, growing, content-driven
advertising-driven company and not mask that with access cash,"
AOL Chief Executive Tim Armstrong told an audience of media
executives in New York, confirming the cuts.
Armstrong is attempting to reshape AOL from a company known
for its dial-up access business to a media and entertainment
powerhouse that relies mainly on advertising.
"You can't be great in our business if you don't go to
sleep every night thinking how are we are going to make magical
content for people in the morning," he said.
Yet AOL's ad revenue has declined steadily. During the
fourth quarter it fell 29 percent to $331.6 million on drops
in search, display and third-party ads. Armstrong warned that
advertising revenue would fall as the company restructures its
sales force and ad inventory though he signaled display and
branding advertising sales should return to growth later this
AOL's share of overall display ad revenue in the United
States fell to 5.3 percent in 2010, down from 6.8 percent,
according to estimates from research firm eMarketer. Meanwhile
Google and Facebook increased their share of the display ad pie
to almost 10 percent and 14 percent, respectively in 2010.
The cuts come two days after AOL completed its acquisition
of The Huffington Post news and commentary website for $315
Arianna Huffington, the pundit and founder of the
influential website, took over AOL's editorial operations as
part of the deal.
Since the acquisition on Feb. 7, AOL shares are down about
"We want to go from taking arrows to catching arrows,"
Armstrong said. "Today is a difficult one for our company."
He added: "AOL will turn around."
In India, 300 jobs will be transferred to contractors
MindTree Ltd (MINT.BO) and Hewlett-Packard Co (HPQ.N), another
source told Reuters.
In the United States, AOL plans to cut jobs in the media
and content-production areas, leaving advertising sales and
network operations positions untouched, according to the source
reporting the 900 job cuts.
The source said the company planned to bolster the ranks of
its full-time journalists and move away from a reliance on
Through the global economic recession, AOL prided itself as
one of the biggest recruiters of out-of-work journalists as a
severe decline in advertising revenue in the newspaper industry
wiped out newsrooms across the United States.
Armstrong said AOL had hired 1,300 journalists last year
and the company plans to hire more full-time.
For now, there are no more cuts on the horizon, confirmed
Armstrong, although he added that could change. "In our
situation we don't have the luxury of long-term planning," he
AOL shares were down 1 cent at $19.33 in afternoon trading
on the New York Stock Exchange.
(Additional reporting by Jennifer Saba in New York and Himank
Sharma in Bangalore; editing by John Wallace, Derek Caney and