November 9, 2004 8:15 AM PST

AOL restructures in a four-way shift

America Online will reorganize itself into four business units to try to better serve customers and rekindle the company's growth, representatives of the Time Warner subsidiary confirmed Tuesday.

In an e-mail sent to all of the company's employees Monday, AOL Chief Executive Jonathan Miller said the company will be split into four divisions dubbed Access, Audience, Digital Services and AOL Europe. Company representatives said Tuesday that the move reflects AOL's strategy to more effectively align its overall composition with the manner in which its customers use its various services.

As part of the restructuring, three of the company's top executives will leave their current roles. Two of them--J. Michael Kelly, chief executive of AOL international and Web services, and Lisa Hook, president of AOL broadband, premium and developer services--will remain with the company during the reorganization with plans to leave AOL sometime in the spring.

Joseph A. Ripp, AOL's vice chairman and chief operating officer, will leave the company's Dulles, Va., headquarters to work with Don Logan, chairman of Time Warner's media and communications group, in New York. Company representatives said Ripp's move is largely based on his preference to work closer to his Connecticut home, from which he had been commuting to Virginia for some time.

The Access unit will be focused on the company's core ISP services, including its broadband, dial-up and low-cost CompuServe and Netscape operations. The Audience unit will encompass many of the firm's consumer-oriented Web holdings, such as its AOL instant messenger, Mapquest and Moviefone services. The Digital Services group will market the many add-on services AOL markets to its ISP customers. And AOL Europe will oversee the company's operations in France, Germany and the United Kingdom.

News of the restructuring follows recent reports that AOL plans to cut more than 700 jobs from its work force next month, as the online giant continues to struggle with declining subscriber numbers. According to a source familiar with the plans, a majority of the layoffs will come from the company's northern Virginia headquarters, where it employs about 5,000 workers. The company overall has 13,000 employees throughout the United States. The job eliminations are expected to begin in December.

Last December, the company cut 450 jobs from its California operations, a move that included closing two offices and slicing the number of its software developers in half.

AOL saw its U.S. subscriber rate fall to 23.4 million in the quarter ended June 30, compared with 25.3 million a year ago. Overall, the company has lost more than 3 million of its $23.90-a-month premium dial-up customers, though that loss has partially been offset by gains in its standalone $14.95 "bring your own access" service.

 

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