New York, Jan 29: Due to slump in advertising, Time Warner Inc's AOL has decided to layoff about 700 jobs or 10 per cent of its workforce. This would help the company for the possible merger with Yahoo Inc.
In a memo circulated to employees of AOL on Wednesday, Jan 28 Chief Executive Randy Falco said that to minimize layoffs, the company will also eliminate merit-pay increases.
By the end of March, most of the job cuts will be made in the United States, Falco said. In the next several quarters layoffs will be executed in other offices of AOL around the world.
The extreme steps of job cuts is done due to global economic slump, Falco expressed."Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars," he said.
AOL's is in talks with Yahoo and Microsoft Corp to combine its advertising business with any of two companies. The merger would provide them greater audience scale. Time Warner Chief Executive Jeffrey Bewkes had met with Microsoft CEO Steve Ballmer and Yahoo Chairman Roy Bostock at Time Warner's New York headquarters earlier this month.
The cost cutting at AOL would benefit the deal talks with Yahoo or Microsoft, as those companies are seeking ways to improve operating efficiencies. Even Google Inc recorded a $726 million write-down of its 5 percent stake in AOL.
The stake, which Google bought in 2005, had originally valued AOL at around $20 billion. The writedown implies AOL is now valued at around $5.5 billion.
OneIndia News (With inputs from Agencies)