AOL throws open e-mail subscriptions & AOL reveals plans to cut 5,000 jobs
AOL throws open e-mail subscriptions
By Aline van Duyn in New York
Copyright The Financial Times Limited 2006
Published: August 3 2006 03:00 | Last updated: August 3 2006 03:00
AOL yesterday made its boldest effort to ditch its reputation as a dinosaur reliant on a dying dial-up business by offering free e-mail addresses to people signing up for broadband elsewhere.
The move marks AOL's attempt to square up to its biggest competitors, Yahoo, MSN and Google, which provide free e-mail and other services and have been snatching AOL's millions of departing customers.
The push is also a last effort to turn AOL, the "new media" giant which disastrously acquired "old media" company Time Warner at the height of the internet boom in 2001, into a growth business capable of lifting Time Warner's flagging shares.
The plan, unveiled by Jeff Bewkes, number two at Time Warner and heir apparent to Dick Parsons, and Jonathan Miller, AOL chief, is risky. AOL's income from its 18m US dial-up subscribers, although declining, accounts for 80 per cent of its income, $2bn in the last quarter alone.
However, a planned $1bn in cost cuts, and anticipated growth in online advertising because of an expected rise in AOL's internet audience, means Time Warner does not expect AOL profits to fall this year and expects them to rise from next year.
"This is finally a strong move from us that will hurt our competition," said Mr Bewkes. "We are going to stop sending our members to our competitors."
Stronger-than-anticipated gains in AOL's advertising revenues in the second quarter - up 40 per cent relative to last year to $449m - and investor relief that the plan was not expected to hurt profits lifted Time Warner's shares more than 3 per cent to $16.75.
AOL, which is second only to Yahoo in US internet usage, said its e-mail users were also its most active online users, and doing nothing would result in a further 30bn to 40bn of page view losses this year. In addition, it has found that broadband users are more active on the internet than dial-up customers. Free e-mail will be available from September to any internet users around the world.
Measures such as a $20bn share buyback and cost cuts have failed to lift Time Warner's shares, mainly because of concerns about AOL's future. Time Warner - which also includes the Warner Brothers and New Line studios, and cable channels CNN and HBO - reported net income of $1bn, or 24 cents a share, for the quarter.
Revenue from its cable business, its most profitable arm, rose 15 per cent to $2.7bn. Its Time Inc publishing business continued to disappoint amid declines in magazine subscriptions. Mr Bewkes said cost controls would remain key in this business.
*AOL's attempts to sell itsEuropean internet access business took a step forward yesterday as it announced exclusive negotiations with Neuf Cegetel to sellits access services business in France.
AOL reveals plans to cut 5,000 jobs
By Aline van Duyn in New York
Copyright The Financial Times Limited 2006
Published: August 4 2006 03:00 | Last updated: August 4 2006 03:00
A day after unveiling a strategy aimed at boosting its online audience, internet group AOL told its 19,000 staff around the world that within six months 5,000 of them would no longer be on its payroll.
The move to get rid of about one-quarter of its staff, AOL's biggest employee reduction plan, is a key part of the planned $1bn in cost savings the group has promised it would make by the end of next year.
A new strategy which makes key AOL services such as e-mail and anti-spam software free is aimed at increasing AOL's share of the fast-growing internet advertising market.
The plan, the success of which is regarded as essential to lifting the flagging shares of AOL's parent, Time Warner, is likely to trigger millions of its 18m US internet dial-up subscribers to cancel their accounts. The resulting sharp drop in income from subscriptions as dial-up customers switch to broadband internet connections from other providers has to be offset by cost cuts.
Jonathan Miller, AOL's chief executive who devised the plan together with Jeff Bewkes, Time Warner's president and chief operating officer, told staff of the likely staff cuts on Thursday morning.
About half of AOL's staff are based in the US, with the remainder spread around the world, mostly in Europe.
As part of a restructuring process aimed at ditching its lucrative but declining business of providing internet access via telephone lines, AOL is selling off its access businesses in Europe, divisions which employ about 3,000 people.
Although some staff might be retained by companies buying the business, people familiar with plans said many were likely to lose their jobs in any sale.
In the US, the biggest joblosses are expected to come at AOL's customer service call centres. Employing around 3,000 staff, and dealing with 24-hour customer support helplines as well as trying to persuade customers to avoid cancelling subscriptions, these centres are based around the US.
Time Warner, the media group with which AOL disastrously merged at the height of the internet boom in 2001, has seen its shares fall this year in spite of strength is some of its other businesses, such as cable or its movie studios.
This is attributed by many shareholders to AOL's declining subscription business.
AOL said it expected to incur restructuring costs of $250m- $350m by the end of next year. It hopes profits will start to grow next year as advertising continues to grow.
Many of the dial-up customers who have left AOL have opened free e-mail accounts with rivals Yahoo, MSN and Google. AOL hopes its e-mail customers will stay with it and view its content instead.
By Aline van Duyn in New York
Copyright The Financial Times Limited 2006
Published: August 3 2006 03:00 | Last updated: August 3 2006 03:00
AOL yesterday made its boldest effort to ditch its reputation as a dinosaur reliant on a dying dial-up business by offering free e-mail addresses to people signing up for broadband elsewhere.
The move marks AOL's attempt to square up to its biggest competitors, Yahoo, MSN and Google, which provide free e-mail and other services and have been snatching AOL's millions of departing customers.
The push is also a last effort to turn AOL, the "new media" giant which disastrously acquired "old media" company Time Warner at the height of the internet boom in 2001, into a growth business capable of lifting Time Warner's flagging shares.
The plan, unveiled by Jeff Bewkes, number two at Time Warner and heir apparent to Dick Parsons, and Jonathan Miller, AOL chief, is risky. AOL's income from its 18m US dial-up subscribers, although declining, accounts for 80 per cent of its income, $2bn in the last quarter alone.
However, a planned $1bn in cost cuts, and anticipated growth in online advertising because of an expected rise in AOL's internet audience, means Time Warner does not expect AOL profits to fall this year and expects them to rise from next year.
"This is finally a strong move from us that will hurt our competition," said Mr Bewkes. "We are going to stop sending our members to our competitors."
Stronger-than-anticipated gains in AOL's advertising revenues in the second quarter - up 40 per cent relative to last year to $449m - and investor relief that the plan was not expected to hurt profits lifted Time Warner's shares more than 3 per cent to $16.75.
AOL, which is second only to Yahoo in US internet usage, said its e-mail users were also its most active online users, and doing nothing would result in a further 30bn to 40bn of page view losses this year. In addition, it has found that broadband users are more active on the internet than dial-up customers. Free e-mail will be available from September to any internet users around the world.
Measures such as a $20bn share buyback and cost cuts have failed to lift Time Warner's shares, mainly because of concerns about AOL's future. Time Warner - which also includes the Warner Brothers and New Line studios, and cable channels CNN and HBO - reported net income of $1bn, or 24 cents a share, for the quarter.
Revenue from its cable business, its most profitable arm, rose 15 per cent to $2.7bn. Its Time Inc publishing business continued to disappoint amid declines in magazine subscriptions. Mr Bewkes said cost controls would remain key in this business.
*AOL's attempts to sell itsEuropean internet access business took a step forward yesterday as it announced exclusive negotiations with Neuf Cegetel to sellits access services business in France.
AOL reveals plans to cut 5,000 jobs
By Aline van Duyn in New York
Copyright The Financial Times Limited 2006
Published: August 4 2006 03:00 | Last updated: August 4 2006 03:00
A day after unveiling a strategy aimed at boosting its online audience, internet group AOL told its 19,000 staff around the world that within six months 5,000 of them would no longer be on its payroll.
The move to get rid of about one-quarter of its staff, AOL's biggest employee reduction plan, is a key part of the planned $1bn in cost savings the group has promised it would make by the end of next year.
A new strategy which makes key AOL services such as e-mail and anti-spam software free is aimed at increasing AOL's share of the fast-growing internet advertising market.
The plan, the success of which is regarded as essential to lifting the flagging shares of AOL's parent, Time Warner, is likely to trigger millions of its 18m US internet dial-up subscribers to cancel their accounts. The resulting sharp drop in income from subscriptions as dial-up customers switch to broadband internet connections from other providers has to be offset by cost cuts.
Jonathan Miller, AOL's chief executive who devised the plan together with Jeff Bewkes, Time Warner's president and chief operating officer, told staff of the likely staff cuts on Thursday morning.
About half of AOL's staff are based in the US, with the remainder spread around the world, mostly in Europe.
As part of a restructuring process aimed at ditching its lucrative but declining business of providing internet access via telephone lines, AOL is selling off its access businesses in Europe, divisions which employ about 3,000 people.
Although some staff might be retained by companies buying the business, people familiar with plans said many were likely to lose their jobs in any sale.
In the US, the biggest joblosses are expected to come at AOL's customer service call centres. Employing around 3,000 staff, and dealing with 24-hour customer support helplines as well as trying to persuade customers to avoid cancelling subscriptions, these centres are based around the US.
Time Warner, the media group with which AOL disastrously merged at the height of the internet boom in 2001, has seen its shares fall this year in spite of strength is some of its other businesses, such as cable or its movie studios.
This is attributed by many shareholders to AOL's declining subscription business.
AOL said it expected to incur restructuring costs of $250m- $350m by the end of next year. It hopes profits will start to grow next year as advertising continues to grow.
Many of the dial-up customers who have left AOL have opened free e-mail accounts with rivals Yahoo, MSN and Google. AOL hopes its e-mail customers will stay with it and view its content instead.
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