AOL will cut 200 jobs in the U.S. and 700 in India said CEO Tim Armstrong Thursday at the Bloomberg Media Summit in New York City. Armstrong says that AOL’s staff is moving toward 70% editorial and other content divisions. They are also moving to having less freelancers and more full-time staff.
The Huffington Post acquisition costed AOL 40% of its cash. Arianna Huffington, now the president and editor-in-chief over all AOL media outlets, will be moving to New York Thursday. Armstrong believes the Huffington Post deal is “a signal” to competitors. While Armstrong remains positive, AOL stock has dropped 25% since its IPO.
“AOL will turn around. I have no doubt about that. The employees deserve a ton of credit,” he said. “To go from managing a decline to managing growth is physically getting up and doing something different every day.”
At this point in time, AOL still makes mosts of its money from dial-up customers. These customers account for 40% of its business, but the revenue there is shrinking. AOL’s annual yearly decline in that revenue stream is 25-29%. This year alone, AOL has spent $530 million on acquisitions in an effort to transition from an ancient dial-up Internet company into a content powerhouse. Last year, they acquired TechCrunch, online video distributor 5Min Media, and social media company Thing Labs.
It remains to be seen if these big moves will pan out in the end, but Armstrong has an interesting take on the transition:
“You have to reinvest in your content,” Armstrong said. “Access to cash can be like a rich uncle — you just get money and you never have to learn. It’s time for that to change.”
via CNN