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AOL lays off staff as subs snub dial-up

Cuts due to decline in membership, increase in computer-savvy users

America Online is laying off some 700 staffers as the company, while newly alluring in the eyes of investors and rivals alike, continues to bleed dial-up subscribers.

AOL said it’s closing its Orlando, Fla., call center, which has 450 employees, and eliminating positions in centers in Jacksonville, Fla.; Tucson, Ariz.; and its headquarters in Dulles, Va.

Spokesman Nicholas Graham attributed the cuts to a decline in members and an increased base of “computer-savvy” users who do a lot of their own troubleshooting.

The cuts rep about 4% of AOL’s 20,000 employees worldwide, the largest batch of pinkslips since December 2004, when about the same number of people were let go. Netco has been shedding staff for the past few years as it slashes costs and rejiggers its business, focusing more on entertainment and ad-supported content.

Earlier this month, the company launched a nationwide ad campaign for AOL.com, its new high-speed service.

“We’re managing to scale our resources in tandem with the needs of our members and our business goals,” Graham said.

The tweaking at AOL, side by side with a resurgence of interest in the Internet space by Wall Street and media congloms, has turned AOL from a laggard to a hot commodity. Heavyweights like Microsoft, Yahoo!, Google and Comcast are all said to be courting the company.

The layoffs aren’t related to any potential sale of all or part of the company, Graham said, but are part of a review process started much earlier in the year.

News Corp. chief Rupert Murdoch has spent some $1.5 billion in the past six months on Internet acquisitions.

But AOL’s original dial-up business has been steadily declining as high-speed connections roll out in the U.S. and abroad. The latest stats put AOL’s U.S. subs at 20.8 million at the end of June. That was down 917,000 from the previous quarter and off by 2.6 million from the previous year.

In Europe, AOL had 6.2 million members, down 99,000 from the previous quarter and 80,000 from a year earlier.

Dial-up, however, still generates a boatload of cash — about $1 billion annually for its parent, Time Warner.

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