Due to AOL’s deals over the past year, the company has decided there are a number of areas that need consolidating in order to “improve operations and limit the amount of hand-offs in our business processes”. According to CEO Tim Armstrong, most cuts will be focused in the company’s corporate units while resources are shifted towards mobile, video and data-related products.
Last October, the company added 1,500 jobs after it acquired Millenial Media for $238 million in a deal to expand its mobile advertising presence. The company is currently split into two major segments consisting of media and platforms. Major news brands such as HuffingtonPost and TechCrunch are included under media while its advertising efforts are part of the platforms group.
“The layoffs are related to a 2017 strategy where we will add to our business,” he said. “These are super-targeted by area, and we will be re-growing, especially in video and mobile.”
Last May, Verizon agreed to purchase AOL for $4.4 billion, and later in July agreed to purchase Yahoo’s operating business for $4.83 billion with a goal of merging the two acquisitions into a single company that can compete with other digital media brands.
The Yahoo deal is expected to close in Q1 2017, but now Verizon is asking for a $1 billion discount after a dark web sale occurred containing 200 million customer accounts, along with disclosure of a previously unpublicized server breach containing personal information and unencrypted passwords from over 500 million customer accounts.
While Verizon and Yahoo continue discussions, AOL and Yahoo are expected to discuss integration strategies and determine leadership positions for several executives.
“Our planning process was built around [our] strategy and around the best way to operate that strategy,” said Armstrong in a memo to AOL staff. “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.”