Some more details are emerging around AOL’s reorganization plans. Sources tell us that the company will lay off around 150 people, with the majority in sales. As part of it, AOL is also consolidating some websites. Gaming site Joystiq and Apple news site TUAW are both being folded into Engadget, and AOL Autos has already been folded into Autoblog.
While Verge earlier today reported that both tech blogs were being closed, this is not quite accurate: Joystiq will stay on as a separate channel at Engadget, while TUAW content will be folded into the bigger site, we understand. It’s still being decided whether the two brand names will remain. (Update: I’m sad to add that the Joystiq closure appears to be official now and many are out of a job.)
As for the sales reorg, AOL is making more of a shift into programmatic advertising, which means a heavier investment in technology with less emphasis on salespeople.
The news is coming ahead of AOL reporting its Q4 earnings on February 11. As we noted before, restructuring should not come as a surprise, given statements made during its last earnings in November 2014.
“As we look out to 2015, our strategy and decisions will be driven by the following organizing principles,” CEO Tim Armstrong during the earnings call. “Number one, we’ll focus our capital allocation resource management and management time against scaled assets and platforms. Two, we will organize our asset portfolio around scaled value and scaled growth assets. Three, we’ll simplify everything that can be simplified.”
Later he focused on ways that this could be implemented, noting that the company will look for “an increase in the value and growth of our global content brands by simplifying the portfolio of brands and increasing our share of video and mobile in key content areas.”
While TUAW and Joystiq both have longstanding reputations and brands in the tech world, their traffic has been in decline. Both came to AOL via its acquisition of Weblogs in 2005; at the time the group operated some 90 blogs.
Armstrong’s statements in November point to AOL looking to cut out costs (read: people and unprofitable operations) as it pushes ahead to make the revenue drivers into more solid businesses.
In Q3, AOL made $454.5 million from advertising revenues (combining AOL properties display, AOL properties search and third-party platform), which worked out to about 73% of all of its $626.8 million in revenues for the quarter. But if you look at the company’s profit, it is currently driven not by its advertising business but by its subscriptions revenues (eg its legacy dial-up business and other paid services). The Membership Group posted adjusted operating income of $139.2 million, while Platforms posted an adjusted operating loss of $600,000, and the Brand group had adjusted operating income of $17 million.
Updated throughout with more background and details.