AOL Lays Off 20 Percent of Its Workforce

As AOL looks to the future following its $315 million acquisition of the Huffington Post, a good chunk of the old regime will be left behind. AOL is in the process of handing out around 900 pink slips, which represents 20 percent of the company's workforce. All affected employees have already been notified, who according to All Things Digital, will be receiving four weeks of severance pay plus an additional week for each of service. So what comes next for AOL?

In a memo titled "AOL's Next Step," company CEO Tim Armstrong called this a "critical step on the comeback trail for AOL," adding that they're "creating a next generation hyper-local, national, and global media company." We're not sure exactly what that is, but investors will have to trust that Armstrong and company know what they're doing, and where they're headed.

AOL once ruled the dial-up scene, but that was a long time ago. Since then, users have flocked to broadband services, leaving their AOL accounts behind. Believe it or not, the dial-up business reportedly still accounts for 40 percent of AOL's revenue with 2 million U.S. subscribers. That isn't the future, however, and Armstrong reckons that number will drop by 25-29 percent a year from now.

"The Huffington Post deal for us really was about trying to transition the company to be more of a digital media company," Armstrong said.

Going forward, the Huffington Post is being combined with AOL's existing media properties to create what it's calling the Huffington Post Media Group, with Arianna Huffington leading the charge.

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