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AOL will hand out holiday pinkslips

Plans to lay off 700 workers in December

America Online is planning to lay off more than 700 workers, or about 5% of its U.S. workforce.

Move comes just a day before corporate parent Time Warner reports corporate earnings today, possibly foreshadowing worse than expected earnings for the conglom’s online division.

A source at the company confirmed the layoffs are likely to occur in December and will be across divisions within AOL, although they’re likely to be focused in its northern Virginia headquarters.

A company rep declined to comment, however.

Cuts are becoming an annual December tradition for AOL. Company laid off 450 employees at the same time last year.

AOL continued to lose subscribers in the second quarter, but has been growing its advertising business. To facilitate the transition in its focus from sub revenue to advertising, company has been putting more of its previously exclusive content onto the Web.

Time Warner’s been looking for AOL to deliver double-digit returns after years of decline as its users defect to high-speed Internet access through cable providers and telcos.

Time Warner’s cable chairman Don Logan recently told investors that AOL may still find itself up for sale if its performance doesn’t improve (Daily Variety, Oct. 6).

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