AOL CEO Tim Armstrong just announced internally that there will be layoffs across AOL’s global workforce (AOL is TechCrunch’s parent company). The company will focus on mobile, video and data across two business units — media and platforms.
While the company doesn’t say exactly how many people will be affected by these layoffs, it is going to impact different teams across the global workforce. According to Recode, 500 employees are expected to lose their jobs. There are around 6,800 employees working for AOL in total, so today’s layoffs represent around 7 percent of the company. According to a source familiar with the matter, at least 55 job cuts affect the advertising technology division (Platforms) but most of the cuts are going to affect non-Platforms employees (e.g. Product, Media, Central Tech…).
This is a move to streamline the company’s workforce after a period of external growth. Over the last 12 months, AOL acquired Millennial Media and took over most of Microsoft’s advertising business. With those deals, AOL added more than 1,500 employees.
Back in July, AOL’s parent company Verizon announced that it would acquire Yahoo for $4.83 billion. If the deal goes through, the telecom company wants to combine Yahoo and AOL together.
So AOL wants to reduce its workforce ahead of the merger with Yahoo, but there could be more layoffs when Yahoo joins Verizon. The acquisition of Yahoo hasn’t closed yet. Yahoo confirmed in September that it had suffered a data breach affecting at least 500 million users. The data breach had a “material impact” on the acquisition discussions.
In an internal memo, Armstrong clarifies AOL’s business units. The Huffington Post, Engadget, TechCrunch, search and communications services are now part of the media unit, while advertising technology services are part of the AOL Platforms unit.
Armstrong sent the following memo to AOL employees called “Structuring AOL for 2017” (emphasis was in the original memo):
Over the last 3 months, we have solidified the operating plan we will use to propel AOL to our 2020 goals and mission of Building Brands People Love. Our process forced us to look at our strategy, goals, and organization in relation to the dynamically changing industry we compete in as a company. Based on our strategy and the changes we see in the industry, we are reshaping parts of the company today.
The company will be focused on two simple global business units: Media (including Search and Communications) and Platforms and will be aligned to drive a talent and operations plan in line with profitability.
Mobile, video, and data are the key growth drivers of that strategy and the company will be putting resources into each of these areas.
There a few important principles and factors driving our strategy decisions for 2017:
- Despite being in the midst of transitioning to a business model that heavily relies on off-network content distribution and programmatic advertising, we will operate profitably in the new industry paradigm. We have always chosen to make changes ahead of the curve and we are doing that again today.
- Due to the deals we have done over the past 12 months, we have added over 1,500 new people to the company. As we have settled into those changes, there are a number of areas that require consolidation to improve operations and limit the amount of hand-offs in our business processes. This will impact a small percentage of the global workforce.
- Our planning process was built around the strategy and around the best way to operate that strategy. Each area within the company was reviewed through the lens of our strategy and while we will be reducing some areas for 2017, other areas will add headcount and resources.
- The talent we have at the company is very strong. The changes we are making are about setting the company on a path to successfully operating in today and tomorrow's reality.
We have a mission and a responsibility to continue to move AOL into the future – something we have done a good job of in the past. The best way for us to grow is to move in front of change rather than be moved by change. The more we differentiate our strategy and products, the more we move from strategy to execution, and the more we speed up our product delivery, the more value we will confer to our consumers and customers – and that is where our focus needs to live.
Teams across the company will be meeting with their managers today to discuss the changes. The talent affected at the company today is important and we will come together to help our people take the next steps in their careers.