AOL plans to cut up to 2,500 jobs

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SAN FRANCISCO — The struggling Internet company AOL plans to shed up to 2,500 jobs — more than a third of its work force — as it prepares to separate from Time Warner and finally sever their ill-fated marriage.

Major job cuts had been expected and seemed certain after Time Warner said last week that AOL would take $200 million in charges for severance and other restructuring-related costs. But the magnitude was not known until Thursday.

AOL, which has already pared thousands of workers in recent years and now employs about 6,900, is asking for volunteers to accept buyouts. If it falls short of the 2,500 target, it plans layoffs to reach a payroll cut of up to 2,300 positions, a third of its current total.

The cuts will leave AOL at less than a quarter the size it was at its peak in 2004, when it had more than 20,000 employees.

The reductions show the company is endeavoring to become lean as it leaves Time Warner’s side in three weeks, but it is still unclear how they will help the Internet company, which has been trying to reinvent itself as a content and advertising company amid an ongoing decline in its legacy dial-up Internet access business.

The voluntary offer is open to all employees from Dec. 4 through Dec. 11, AOL spokeswoman Tricia Primrose said. The job cuts still need approval from the new AOL board and come on top of about 100 layoffs announced Nov. 10.

Frederick Moran, an analyst at The Benchmark Co., said the cuts suggest tough times ahead.

“Obviously companies don’t make such massive layoffs unless their growth prospects are questionable, and that’s the biggest issue overhanging AOL — can it ever see its growth restored after years of deterioration?” he asked.

AOL’s dial-up Internet access business has been declining for many years, and the company already had shed thousands of jobs as it pared down to focus more on producing online content to garner advertising revenue.

But AOL had staggered under those efforts, even before the recession drove the advertising market into a slump.

AOL’s operations still make money overall, but that profit has been falling. Nonetheless, AOL does have a few bright spots, including popular tech blog Engadget and celebrity Web site TMZ.com. TMZ is a joint venture with another Time Warner unit, Telepictures Productions, and is often credited with being the first to report major developments including Michael Jackson’s death.

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