AOL Will Cut Up to 900 Jobs as CEO Armstrong Integrates Huffington Post

AOL Inc. (AOL), the Internet company that agreed to buy the Huffington Post last month, said it will eliminate as many as 900 jobs as the company integrates the news website and restructures to try to return to revenue growth.

The company will cut as many as 700 jobs in India and 200 in the U.S., Chief Executive Officer Tim Armstrong wrote in a memo to employees today. In India, 300 of the affected employees will move to outsourcing partners and continue to do work for AOL, he said.

“The changes for me today are very personal,” said Armstrong at the Bloomberg Media Summit in New York. “AOL employees deserve a tremendous amount of credit because I don’t think it’s easy to go from managing decline to managing growth.”

Armstrong said he would discuss the job cuts with employees later today.

“Our strategy remains clear: create high quality content experiences for consumers, at scale,” Armstrong wrote in the memo. “Today, we are announcing an organizational structure that will significantly improve AOL’s ability to focus on growth.”

The company had 5,860 employees at the end of last year, according to regulatory filings. If the company sheds 900 jobs, that would be 15 percent of the total.

Declining Revenue

AOL, whose sales have declined for four straight quarters, agreed to buy the Huffington Post for $315 million, aiming to increase online content to help boost advertising revenue. In India, the company is outsourcing back-office work to cut costs and focus on increasing consumer product sales.

Arianna Huffington, co-founder of the Huffington Post, joined AOL as president and editor-in-chief of a newly formed media group, which includes other AOL content. Her website will serve as the model for other journalism efforts, Armstrong said in the memo.

“AOL will invest more heavily in our in-house editorial team and transition away from a reliance on freelance journalists,” he said. “Journalists are the heart and soul of a media company.”

Armstrong said he recently made a personal purchase of $10 million in AOL stock. In May, the former Google executive, who became AOL’s CEO in 2009, bought $11.1 million worth of stock.

“AOL will turn around,” he said. “I have no doubt about that.”

AOL, based in New York, fell 34 cents, or 1.8 percent, to $19 at 4:01 p.m. in New York Stock Exchange composite trading. The shares have fallen 20 percent this year.

To contact the reporters on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net; Brett Pulley in New York at bpulley@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net.

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