AOL laying off more than 700 employees

updated 2:11 p.m. ET Oct. 19, 2005

NEW YORK - America Online is laying off more than 700 employees, primarily in member-services call centers, in response to the ongoing decline in subscribers for its dial-up Internet-access services.

Under the plan, the Time Warner Inc. unit is closing its center in Orlando, Fla., and is cutting positions in centers in Jacksonville, Fla., and Tucson, Ariz., and at AOL’s corporate headquarters in Dulles, Va.

The cuts amount to about 4 percent of AOL’s 20,000 global work force. The company hasn’t announced layoffs of this magnitude since December 2004.

AOL said the job cuts were driven by declining subscriber numbers, and were not engineered to attract potential strategic investors.

A number of suitors are interested in taking a stake in AOL’s growing, advertising-supported online content business, including Microsoft Corp., Yahoo Corp., and a team-up of Google Inc. and Comcast Corp. (MSNBC is a Microsoft-NBC joint venture.)

These players aren’t interested in AOL’s access business, which is large and highly profitable but declining as consumers shift to faster broadband access services. As of June 30, AOL had 20.8 million U.S. members, down 917,000 from the March quarter and 2.6 million from a year earlier. In Europe, AOL had 6.2 million members, down 99,000 from the previous quarter and 80,000 from a year earlier.

“We’re at a point in time where it makes sense to realign our access business,” said AOL spokesman Nicholas J. Graham. “A lot has changed regarding our membership and access business and we’re managing that transformation.”

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