AOL Cuts 750 Jobs

By CBSNews.com's David
Paul Kuhn

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The nation's largest Internet service provider, America Online Inc., has begun cutting about 750 jobs, company officials tell CBSNews.com.

More than half of the slashed employees work in AOL's northern Virginia company headquarters. The positions vary from technology development to marketing. No one department saw the brunt of the job losses.

America Online workers in Ohio and California will also be affected, as well as a few in New York. The layoffs were first reported in early November as part of parent company Time Warner's earnings statement.

The report cited a restructuring charge of $50 million, "the cost of providing severance packages to affected employees," explained one America Online official. But AOL did not specify the number of workers to be laid off or their locations in the original report.

America Online has about 5,000 employees in the northern Virginia office and about 20,000 worldwide. In 2001, the company slashed about 1,700 jobs, based out of Virginia and California.

America Online is under investigation by the S.E.C. and the Justice Department for a $400 million payment it received from German media company, Bertelsmann. The Washington Post reported in November that a $750 million settlement had nearly been reached.

The investigation surrounded allegations that the Bertelsmann payment was used to inflate America Online's growth.

America Online dial-up customer base has been struggling against cheaper and faster competition. In its third quarter, AOL's subscriber base was 2 million less than the year before. That quarter alone, it lost 646,000 subscribers, bringing its total subscriber base down to 22.7 million.