AOL said US job cuts would be finalised by the end of March, with the whole process being completed over the next several quarters. A spokesperson for AOL said no final decision had yet been made over how the cutbacks might affect European operations.
AOL chief executive Randy Falco informed employees in a memo earlier today that online marketers had tightened their ad buying across the board, reducing their spend by "hundreds of millions of dollars".
The memo said the company was in year two of a three-year turn-around plan, moving from an internet access company, to an advertising-focused company.
"We're at a pivotal point in AOL's transformation, and need to be even more strategically focused and operationally efficient as we weather the economic storm," the memo added.
As part of the plan, AOL has transformed itself from a largely subscription-based ISP into an ad-supported publisher and ad platform. It has formed Platform-A to combine its various ad businesses, such as Tacoda, Third Screen Media and Adtech, and has created People Networks, a social media unit, which houses Bebo, AIM and ICQ. Earlier this month it formed MediaGlow, to house its various publishing businesses.
"With these and other changes, we will take significant annual run-rate costs out of our business while, importantly, retaining the flexibility to invest in our growth strategy," the memo said.
The cuts have triggered speculation that the company could now look more attractive to a potential acquisition partners, such as Yahoo.
Earlier this month, Jeffrey Bewkes, chief executive of AOL owner Time Warner, reportedly met with Microsoft chief executive Steve Ballmer and Yahoo chairman Roy Bostock.
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