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AOL slashes jobs, might sell Bebo*

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Jan 29, 2009 

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Edward Barrera  |

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AOL slashes jobs, might sell Bebo*

ADOTAS — Now at least we know one thing AOL is doing – stopping merit pay, starting layoffs and could sell Bebo.

The company announced that it is laying off 10 percent of its workforce–or 700 people–and other cost cuts because of declining advertising revenue.  According to an internal memo from CEO Randy Falco, because of the recession, online marketers are slowing ad buying, reducing  spending by hundreds of millions of dollars.

“Part of this will involve consolidating groups to gain efficiencies that will unfortunately lead to head-count reductions. We anticipate this will result in a net reduction of our workforce of up to 10% over the next several quarters–and we will attempt to finalize all domestic actions by the end of March.”

AOL will be eliminating merit pay increases in 2009, so, according to Falco, the company can minimize the layoffs. He said the company is reviewing its international operations and continue to consolidate facilities. The company cut about 2,000 jobs in 2007.  Falco added that the company’s strategy was focused on building and growing mutually dependent publishing, advertising and social media businesses.

“We grew our MediaGlow audience via an efficient content development model that in 2008 enabled us to launch more than 20 new sites that are generating significant page view (up 64% year over year in December), engagement (up 39% year over year) and unduplicated user (70+ million) numbers. This momentum will continue in 2009 with our goal of creating an additional 30+ editorially curated sites focused on consumer passion points.”

As part of its social media business, the company bought Bebo last year for $850 million. Now, according to Techcrunch, AOL and its parent company Time Warner might be considering selling it.  A proposal the company is denying.  *And even worse, Henry Blodget thinks Bebo could be worth less than $200 million now. Ouch.

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