AOL Laying Off 7 Percent of Workforce

AOL is laying off about 1,300 employees, or 7 percent of its worldwide work force, and is closing its call center in Jacksonville, Fla.

Other cuts will come from call centers in Ogden, Utah, and Tucson, Ariz.

The layoffs announced Tuesday represent the first major cuts since the Time Warner Inc. (TWX) Internet unit cut about 700 positions last fall.

Although AOL's subscription has been declining, spokesman Nicholas Graham attributed the layoffs to more savvy customers and better tools for them to help themselves.

"The Internet world of 2006 is very different from the world of 1996 when AOL first established these member centers," Graham said. "Today, AOL members are more savvy and sophisticated online. They are very different members today than they were in 1996."

In its early days, AOL had a reputation for attracting beginners, leading some longtime users to deride the service as the "Internet on training wheels."

But AOL dropped some of its hand-holding over the years and began offering its subscribers computer-diagnosis, anti-spyware and other free software, "allowing them to troubleshoot on their own," Graham said.

In addition, he said, AOL has been expanding its online help areas, such that 8 million customers a month now look up information themselves online, compared with 5.5 million who interact with a human by phone, e-mail or online chat.

"They are able to accomplish with a couple of clicks what it used to take them a phone call or two or three to accomplish," Graham said.

As a result, Graham said, call volume has dropped by about 50 percent since 2004.

"That's a remarkable success in terms of customer care," he said. "It requires us to rebalance our work force."

By contrast, U.S. subscribers dropped by about 22 percent in the past two years. AOL had 18.6 million subscribers as of March 31, down from a peak of 26.7 million in September 2002, as more Internet users drop dial-up connections in favor of broadband.

AOL is closing its Jacksonville center Tuesday, laying off 780 employees there. It is laying off 300 in Tucson and 125 in Ogden, with nominal reductions in other locations such as Albuquerque, N.M., and Dulles, Va.

More than 500 will remain employed in Tucson and 400 in Ogden. The Ogden reductions take effect Tuesday, and Tucson's are effective June 30.

Shares in Time Warner rose 1 cents to $17.06 in morning trading Tuesday on the New York Stock Exchange.