Living in LoCo
AOL's Falco Says 2,000 Layoffs
Tammi Marcoullier at 11:34 a.m., October 15, 2007 (28 comments)
Over the next couple of months, AOL will lay off 2,000 people out of a worldwide workforce of 10,000, according to a letter to company employees sent by CEO Randy Falco today. These staff reductions begin tomorrow, as have long been rumored throughout the company and in the blogsphere. The Associated Press is reporting that about 750 staff will be cut from Northern Virginia offices, including former headquarters in Dulles; 1,200 total in the U.S.
The severance packages outlined show from 2 to 12 months of compensation, depending on each worker's current level of compensation, job category, and "separation date," which could be the day of the layoff or a date in the future.
In previous years, AOL has given some workers up to 60 days from the date they left the company to mark as their separation date, which adds two months. Needless to say, the lower you are on the totem pole, the lower the amount of money. Executive level workers will get a year of severance, medical benefits and job placement assistance.
One worker I spoke with has been with the company for over 10 years, but will still only get four months of compensation. Compared with other local tech companies, like Nextel where people get eight weeks for every year worked, the staffer said that this is disappointing. Of course no one knows for sure whether they will stay or go. Even if one gets through this week, the next couple months will be spent wondering and worrying about whether you'll be next.
From the email today:
Dear AOL colleague,
Just over a year ago, AOL embarked on an incredibly complex and significant transformation as we fundamentally shifted our business model from a subscription-based ISP to an advertising-supported Web company.
Today, I want to give you an update on where we are in this transition, and talk about further actions we're taking and where we're headed as a company.
When I came to AOL, I knew we had to take several steps to complete our company's transformation.
We aggressively expanded our advertising capabilities, building on the strength of Advertising.com and our premium ad sales force. We acquired three leading-edge advertising companies - ADTECH, Third Screen Media and TACODA - and formed Platform-A. AOL now has one of the largest and most sophisticated ad networks in the world, and we're well positioned to compete where the ad market is heading.
We rebuilt and revitalized our key products, programming channels and platforms. And unique visitors to AOL.com, News, Food, Money & Finance, TMZ, Moviefone, MapQuest and many other sites are up. Our products are once again creating buzz in the market. And to reach the widest audience possible across the Web, we're unbundling our products and programming so users can take them along wherever they go online.
Importantly, we're taking the business global. We're extending AOL's reach into seven new countries this year while globalizing our product development efforts. By the end of next year, AOL will have a presence in 30 countries. That's a remarkable achievement in a relatively short period of time.
We refocused the business around three core areas - Platform-A, Publishing and Access - and are now managing these as three distinct but related components.
Here's why this is important. With Platform-A, we can offer advertisers the most advanced set of solutions across our extensive network of owned-and-operated sites and third-party sites. Publishing provides us the products, programming and platforms we need to sustain a healthy owned-and-operated network. And our Access business continues to be profitable, providing us cash flow to invest in other areas of the business, and it's an important source of primary e-mails and page views.
The last important piece in this transition is the realignment of our costs against these three businesses so we can operate as efficiently and effectively as possible. This is in many ways the most difficult step, but a necessary one.
As a part of this realignment, tomorrow we begin a reduction in force that will, over the next couple of months, affect a total of about 2,000 people out of our worldwide workforce of 10,000.
Everyone impacted by this reduction deserves our thanks and respect for their contributions to the company. We will aid these individuals in their transition to new opportunities as much as possible, most importantly with what we believe are generous severance packages.
This realignment will allow us to increase investment in high-growth areas of the company - as an example, we added hundreds of people this year through acquisitions - while scaling back in areas with less growth potential or those that aren't core to our business, as we did with the sale of Tegic.
So where is this taking AOL? Put simply, my vision for AOL is to build the largest and most sophisticated global advertising network while we grow the size and engagement of our worldwide audience.
We're only a year and a month into our transformation, and the turnaround has been dramatic. We're now in a position to win as an advertising-supported business. We have a bright future as a company if we can execute on this vision.
Randy
We have obtained a copy of the note about severance packages:
Below is information on the severance package payments and benefits by job level that will be offered to AOL employees who are affected by the reduction in force in the fourth quarter of fiscal year 2007.
Employees will receive their base salary through their separation date together with a payment of 2007 accrued but unused vacation time.
In addition, AOL will provide a severance package to impacted individuals based upon job level as follows:
Level -- Severance -- Outplacement Assistance -- COBRA (Medical/Dental/Vision)
Level J - G: 2 months of annual base pay, 2 months, 2 months
Level F: 4 months, 4 months, 4 months
Level E: 6 months, 6 months, 6 months
Level D: 9 months, 9 months, 9 months
Level C - B: 12 months, 12 months, 12 months
The severance benefits posted here apply only to the 2007 Q4 reduction in force for full and part time AOL LLC employees in the U.S., and, do not apply to any other similar actions past or future. To the extent that there are any discrepancies between this information and terms in the separation package, please refer to your separation package.
In addition, provided the Company meets its objectives and pays a bonus to eligible employees under the Fiscal Year 2007 Annual Incentive Plan (" AIP "), impacted employees will receive their AIP bonus payment payable at the same rate as continuing employees up to a maximum 100% of the target percentage.
Employees must sign a Separation Agreement and Release of Claims provided by the Company in order to be eligible to receive any of the payments and benefits outlined above.
More AOL news from The Washington Post's Sam Diaz.
And in this blog: Sept. 17, 2007 -- AOL Employees Weather News of HQ Change
Oct. 12, 2007 -- One AOL Exec Departs
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Ouch, again.
A few years ago I was recruited by an AOL employee to come work over there. Job security there was a major issue for me at the time. Glad I stayed put.
Posted by backinloco (anonymous) on October 15, 2007 at 12:14 p.m. (Suggest removal)
I think the compensation levels are reasonable. After all, finding a job in two months isn't that difficult, if you're willing to expand your search to fields like customer service, sales and clerical.
Posted by Strawberry23 (anonymous) on October 15, 2007 at 12:15 p.m. (Suggest removal)
We all saw this coming when they announced the move of their headquarters a few weeks ago.
Posted by jlp7t (anonymous) on October 15, 2007 at 12:16 p.m. (Suggest removal)
(This comment was removed by the site staff.)
Posted by megaabuse (anonymous) on October 15, 2007 at 12:20 p.m.
It is a shame that AOL is downsizing, but it really shows the transformation of the internet now from what it was 10-15 yrs ago when AOL was the BIG leader! Not anymore! There is no job security anywhere!
Posted by bobby12320007 (anonymous) on October 15, 2007 at 12:40 p.m. (Suggest removal)
>> We all saw this coming when they announced the move of their headquarters a few weeks ago.
Posted by jlp7t (anonymous) on October 15, 2007 at 12:16 p.m <<
Pffft...no doubt. I laughed when the spokesperson downplayed layoffs during the announcement of the move last month. As if anybody was fooled. I'm just surprised that they are moving so quickly to purge the place. 750 workers is a whopping 19% of the personnel at the Dulles location.
Glad I never accepted the offer to go back.
Posted by infojust4me (anonymous) on October 15, 2007 at 12:41 p.m. (Suggest removal)
Although I am sorry for folks losing their positions, that is always a hard thing to deal with, but it is interesting when I cancelled my AOL subscription after a decade as a dedicated customer, I commented to the customer service rep "I can just cancel my subscription, have been a long time customer and it is okay? Nothing to make me stay? Just wait until you get a pink slip and do not have a job because customers have options and continue to leave AOL . . . Will you care then?"
Posted by aljdlj (anonymous) on October 15, 2007 at 12:43 p.m. (Suggest removal)
To any AOLers getting the axe: I'm looking to move up to a SF house in the Ashburn area, preferably w/4 BR, 2-car garage and finished basement. If you're needing to sell fast, send me an e-mail.
Posted by mail3047723 (anonymous) on October 15, 2007 at 12:46 p.m. (Suggest removal)
One can only hope that the low life bottom feeder who wrote the message seeking out homes gets a taste of the "golden rule" at some time in the very near future. Shame on you.
Posted by ronjac76 (anonymous) on October 15, 2007 at 12:59 p.m. (Suggest removal)
Even though the unemployment rate in the area is about 2%, this can't help the housing market.
Downsizing a company is just dreadful for all--the people who stay and the people who are let go. It takes quite a while for the people who stay to recuperate from all the daily ups and downs (mostly downs). It will be a bad time for one and all.
Posted by NativeVirginian (anonymous) on October 15, 2007 at 1:01 p.m. (Suggest removal)
You can always go work for Gap, Inc. in Grove City, Ohio.
Posted by biffgriff (anonymous) on October 15, 2007 at 1:01 p.m. (Suggest removal)
While this is extremely sad, I once more thank Heaven I never went to work at AOL. In fact, when recruiters would call me telling me they wanted me to work in "the Dulles Corridor" in NoVA, I would respond with, sure, as long as your client is not AOL - you couldn't pay me enough to go work there! This once again providng AOL is not in the least concerned about its employees.
Posted by seekwzdm (anonymous) on October 15, 2007 at 1:06 p.m. (Suggest removal)
This is so sad. The lowest man on the job gets the axe again. Now with the money they think they'rw going to save by downsizing, how much of it will line the pockets of the exes???
Posted by brianboyd (anonymous) on October 15, 2007 at 1:55 p.m. (Suggest removal)
Anytime there are mass layoffs at any company it is always sad for the employees. But in this case the writing has been on the wall for years. I mean who even uses dial-up anymore these days. AOL will soon be extinct as their business model just doesn't apply to the current environment. For all remaining employees of AOL, you should be looking for jobs just as hard as the people receiving their notices.
Posted by driddy (anonymous) on October 15, 2007 at 1:57 p.m. (Suggest removal)
Good point driddy. I've been on both sides of the layoff coin, and believe me, it's very often worse for those who "survive the cuts and get to stay." That being said, if there is an area of the country to "get laid off in" it's DC/NO VA/MD. I'm amazed at how many jobs there still are here.
Posted by jeff (anonymous) on October 15, 2007 at 2:08 p.m. (Suggest removal)
Look, job security is an issue wherever you go. AOL has put the pieces together for a credible online strategy and now it is time to see if they can execute on it. The Internet is highly dynamic ... AOL must be the same to stay in the game.
Posted by LawHoo97 (anonymous) on October 15, 2007 at 3:01 p.m. (Suggest removal)
I am sick of people giving their hearts and souls to companies in overtime, working weekends, holidays,etc then that company simply giving the employee shotty severence ... come on! I know someone who's been with the company for several years and is in management but still only getting two months. It is very very sad...
Posted by jim_eismeier (anonymous) on October 15, 2007 at 3:27 p.m. (Suggest removal)
For $9.95 a month, I like my AOL and service (I use Comcast for my 'feed' but won't switch because too many people have my e-mail accounts, yes that's plural). Thankfully I haven't had to call India in about a year.
Posted by DLC1973 (anonymous) on October 15, 2007 at 3:47 p.m. (Suggest removal)
DLC1973, better yet, if you get access from comcast you can switch to free service and not pay AOL a dime and not lose any service
Posted by bobbrown (anonymous) on October 15, 2007 at 3:55 p.m. (Suggest removal)
My heart goes out to those workers that will be affected by the layoffs. But as many of us in the technical field know, this happens frequently - there is no more job security - no large (or small) company looks out for employees - only the company's bottom line - despite what you put into it and how hard you work. I wouldn't be surprised to hear later that a lot more job cuts planned with more of the work going overseas. And Jeff, it is difficult for those who "survive" the cuts, however, they are still getting that same paycheck from a job they are familar with even if the layoffs make it more difficult to perform.
Posted by mywords (anonymous) on October 15, 2007 at 3:58 p.m. (Suggest removal)
AOL will soon be but a memory in the ISP business.
Recently, AOL announced fee increases from $5.00 to $7.00 as a service charge for accepting monthly payments for service that is directly debited from members checking accounts.
Since AOL long ago abandoned yearly membership packages, the fee increase significantly inflates already high fees associated with this payment method.
The results of having been impacted by this increase culminated in me dropping my AOL membership after nearly 14 years.
No wonder AOL is cutting more staff. The intelligence of increasing service fees on members serves to drive members away from paying for the service.
How intelligent is it when a company drives away paying members over a fee increase for electronic account debits that in reality cost the company pennies to complete?
As a member, I used to pay $119.40 per year in monthly membership fees, plus another $60.00 for them to deduct the fee directly from a checking account.
Their announced fee increase would amount to an increase of $24.00 in fees, and I chose to cancel my membership. Their attempt to get $24.00 in increased fees resulted in them losing $179.40 in paid membership and fees. Pretty smart huh?
No wonder AOL is cutting staff.
Its a shame that the staff being cut is more intelligent than the executives that imposed this fee increase.
I should publicly thank AOL for the increased fee that woke me up to how foolish I have been to have been paying for their service all these years.
Posted by ricroe (anonymous) on October 15, 2007 at 3:59 p.m. (Suggest removal)
If you were working at AOL get your security clearance and earn more money. There are many government contractors looking for experienced work force in the Dulles area.
Posted by ed (anonymous) on October 15, 2007 at 7:54 p.m. (Suggest removal)
Never had AOL, as I considered it an ISP for grannies. You want job security, work for the feds. I work with two guys who have been with the federal government for over 30 years; they both come to work happy and satisfied that they serve the public.
Posted by veloboldie (anonymous) on October 15, 2007 at 9:31 p.m. (Suggest removal)
With this news and the news about Sprint/Nextel's command center being moved out of the Dulles Corridor, this effectively marks the end of the Dulles Corridor's entrepreneurial era. As you drive down the toll road, it seems like almost all of the companies that you see now are the government's dependants.
I honestly hope this area's economy does diversify. If a true conservative is elected president and chooses to downsize government spending the way that Reagan did, the spigot is going to be turned off. If a Democrat is elected and brings the isolationism that so many are promising, the spigot that funds so many of the defense-related jobs in this area might also get shut off.
Posted by reston75 (anonymous) on October 15, 2007 at 11:02 p.m. (Suggest removal)
Here's the latest - AOL has increased layoffs to 4000. They started laying off people today (Monday) and will finish all layoffs by 11:00AM tomorrow (Tuesday).
Check out the info/post at www.LoudounStats.com.
Posted by danilo.bogdanovic (anonymous) on October 16, 2007 at 12:24 a.m. (Suggest removal)
danilo. I hope you're wrong.
I really feel for these people. I hated being laid off...even if I knew it was coming.
I've been on the other side of this as well. It sucks being kept on after the lay off...just not as much.
I'll keep all of them in my prayers.
Posted by cer10death (anonymous) on October 16, 2007 at 5:28 a.m. (Suggest removal)
As usual, the guys at the top make stupid decisions but it's the guys at the bottom who have to pay for them. Then the severance package multiplies the insult. More for the toadies and yes-men, less for the worker bees.
I once worked at a place where the company execs moaned that times were tough so they asked people to use up their vacation time. Then after the vacation was all used up, they laid people off right and left.
Think they'd EVER be able to ask anyone to use up vacation again? Think the people who were left after the layoff didn't immediately start letting their fingers do the walking in the employment classifieds?
I agree that the handwriting was on the wall at AOL with the move announcement, at least for anyone who knows how these things usually work.
Thus perishes the "internet companies are special" meme. It's a business and money has to come in or else.
Posted by homekelly (anonymous) on October 18, 2007 at 2:21 p.m. (Suggest removal)
I can't tell you how disappointed I am with all of this. Not a single person made a "Rock Me, Amadeus" comment. Helloooo? FALCO?
Posted by xcop (anonymous) on October 18, 2007 at 7:26 p.m. (Suggest removal)
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