BoomTown has learned that AOL is offering those who “volunteer” to leave the company now a departure package that ranges from three to nine months of pay, compared to one to four months for employees laid off in the first quarter of next year.
It’s a depressing rock-and-a-hard-place choice.
An AOL spokesperson confirmed the offer, which is part of a massive layoff of 2,500 of its 6,000-person workforce.
AOL has hired a pair of New York investment bankers, Morgan Stanley and Allen & Co., to manage the sale of its ICQ instant-messaging unit.
Sources familiar with the situation said interest in buying the asset from two major non-U.S. companies prompted execs at the online service to put a process in place for a deal that will likely occur after AOL becomes an independent company in December.
AOL bought ICQ in 1998 for about $400 million–$287 million outright and $125 million in earnouts for the team.
Sources said AOL to looking to recoup $300 million.
Essentially–although AOL is located in New York and not California–it’s going to be like tremors before the Big One at the online company today as about 100 employees are set to be laid off by management.
It is part of AOL CEO Tim Armstrong’s “Project Everest”–the code name for cost-cutting across the company. After this small cut, there could be a call for voluntary departures, followed by a much more drastic layoff.
The action comes in the same timeframe as the online site’s spinoff from Time Warner.
The Seattle area is going to get another jobless jolt today, with RealNetworks planning to lay off four percent of its workforce, sources said.
That’s a small number–just about 70 people out of its 1,700-person staff–but the move comes on the heels of layoffs of another 800 employees at nearby Microsoft yesterday.
The reasons for the layoffs at RealNetworks are, as was the case at Microsoft, to realign the workforce after the recent economic downturn and to control costs.
In a week, the entire advertising sales staff of MySpace will gather at a swanky new seaside resort about 20 miles south of Los Angeles to get a first glimpse of the fresh direction the company is preparing to take under its new management.
The beleaguered social networking site has been in the midst of an effort to reinvigorate its image, spur innovation in its product and–most of all–pull itself out of a too-long slump, even as longtime rival Facebook has seen explosive growth.
On the possible agenda: A new strategy aimed at music and entertainment; a new look; and, perhaps, a new boss for the ad sales team.
Yahoo exec Brad Garlinghouse–famous for his controversial “Peanut Butter Manifesto,” which correctly chided the Internet giant for becoming so lugubrious several years ago–is taking a job at AOL very similar to the one he left at Yahoo last year.
Garlinghouse, who will remain on the West Coast, will be named president of Internet and mobile communications at AOL, putting him in charge of the New York-based Time Warner online unit’s powerful email and instant-messaging properties, including ICQ and AIM.
He will also be, said AOL CEO Tim Armstrong, its “CEO of Silicon Valley for us.”
In a risky but interesting move that has some at the company nervous and others excited, Yahoo is in the process of moving key development responsibility for its juggernaut Yahoo News unit to Taiwan.
Under the new system, product management, engineering and user interface design for one of Yahoo’s flagship properties will become the responsibility of staffers there.
Editorial employees for Yahoo News–which is the No. 1 news site on the Web with 48.4 unique monthly visitors, according to comScore data –will remain in the U.S., largely located at its Santa Monica, Calif., office.
Yahoo confirmed the change to BoomTown yesterday.
The board of iLike planned a meeting earlier tonight to go over a buyout offer by MySpace, several sources close to the situation said. But it was suddenly canceled because of some thorny tax implications related to the talent-retention part of the deal to purchase the social music start-up.
This does not mean the pending acquisition is in jeopardy, sources said, and it could be on track to be signed as early as today, barring any more complications.
What’s also been unclear is the actual price the social networking giant is paying for iLike, which has been reported as about $20 million. In fact, only $13.5 million will be paid in cash, with $6 million slated for forward payments to retain key talent.
After a while–in a BoomTown mangling of the old cliché–if you are a nail, everything begins to look like a hammer.
So, it is probably inevitable that the next thing for much-beleaguered AOL staffers to start rumbling about is 2,000 people getting laid off next week.
After all, the Time Warner unit has a long history of whacking employees. So, it is easier to assume things will not be different under the regime of the latest CEO, Tim Armstrong.
Except it’s not actually true that such massive cuts are in the offing, since–as many sources I spoke to said–Armstrong is in the early part of figuring out what to do about the cost structure of AOL, after laying out a company strategy and rejiggering management.
BoomTown was so glad we had this time together with Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer, just to have a laugh or sing a song about a major search and advertising deal.
I liveblogged the conference call, which I updated as it happened.
Did Ballmer scream and jump up and down? Did Carol say something naughty?
Read on!
When Time Warner reports its second -quarter earnings tomorrow morning, before the markets open, most Wall Street analysts are not expecting much from the media giant, as it continues to slog toward a rejiggering of itself.
Time Warner–which owns assets like the Warner Bros. movie studio, the AOL online unit, the HBO and Turner cable networks and Time Inc. magazines–is expected to earn 37 cents per share, compared to 72 cents a year ago, according to a poll of analysts from Thomson Reuters.
Revenue is expected to be $6.97 billion, down from $11.56 billion in the same quarter last year. This drop is mostly due to the March spinoff of its cable unit, Time Warner Cable.
But AOL and its magazine unit are expected to continue to drag on Time Warner’s financial performance.
A few weeks ago, when I was having breakfast with legendary Silicon Valley entrepreneur Marc Andreessen about his new venture fund, he talked about what he thought was critical to being successful as an Internet company.
Ticking off names, from Apple CEO Steve Jobs to Facebook CEO Mark Zuckerberg, Andreessen said he always favored technical entrepreneurs for one key reason: “You need someone who lives and breathes product.”
It’s a refrain I have heard a lot recently from a wide range of people in the sector, most especially when talking about two of the more challenging renovations of key Internet brands going on of late.
That would be: Yahoo and MySpace.
As BoomTown previously reported, there have been a lot of exec departures and shifts at Fox Interactive Media and its MySpace unit, which seem to be continuing.
Especially departures, it seems, as the massive restructuring of the digital units of News Corp. keeps shaking out.
Top engineer Max Engel, who ran the social networking site’s open initiatives, for example, is leaving to join the new stealth start-up being helmed by ex-MySpace employees, including former COO Amit Kapur.
And there are a lot of others too.
Over the last weeks, News Corp. Chief Digital Officer Jon Miller and MySpace CEO Owen Van Natta have had their hands full directing massive layoffs at the flagship social-networking site, as well as throughout the Fox Interactive Media division.
The pair discussed the many challenges faced by the giant media company in its digital enterprises in an onstage interview at the seventh D: All Things Digital conference last month.
The layoffs at Fox Interactive Media moved on to Photobucket today, as one-third of its staff of about 120 were let go, sources close to the situation said.
The photo- and video-hosting service was bought for $250 million in mid-2007 by News Corp.
A FIM spokesperson confirmed the layoffs after being contacted by BoomTown, but declined to give specific numbers. But sources told me a total of about 75 people were fired.
Kara Swisher started covering digital issues for The Wall Street Journal's San Francisco bureau in 1997 and also wrote the BoomTown column about the sector. With Walt Mossberg, she co-produces and co-hosts D: All Things Digital, a major high-tech and media conference. Read more »
Here is a statement of my ethics and coverage policies. It is more than most of you want to know, but, in the age of suspicion of the media, I am laying it all out.
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