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750 staff to go at AOL's US base

Jim Hu CNET News.com

Published: 08 Dec 2004 16:00 GMT

About 750 employees at America Online were laid off on Tuesday as part of the Internet giant's efforts to cut costs and to realign its business units, a company representative confirmed.

Most of employees laid off worked at AOL's Dulles, Virginia., headquarters with most departments affected. Tuesday's cuts come one year after AOL laid off about 500 employees, mostly from the company's California offices.

The new layoffs come weeks after AOL announced its intention to realign the company and focus more of its resources on the free Web. While the company will continue selling subscriptions for dial-up access and a "bring your own access" product for broadband users, it has formed a new division that will focus on Web programming and content.

The move toward the free Web is an attempt by AOL to chase after the resurging dollars in online advertising. As companies such as Yahoo, Microsoft's MSN and Google continue to profit heavily off commercial search dollars and increasing display advertising, AOL hopes to get a piece of the action.

The company has little choice but to turn to the Web since subscriber numbers continue to decline. Over the past two years, AOL has lost 4 million subscribers. It had 22.7 million as of Sept. 30.

On the bright side, online advertising revenue has grown for the past three quarters, fuelled largely by a revenue-sharing deal with Google's commercial search business. Earlier this week, parent company Time Warner's CEO Richard Parsons said AOL's online advertising would reach nearly $1bn in 2004, up 33 percent from last year.