AOL, once the giant of the Internet world, is to cut 2 500 staff members – a massive one-third of its workforce.
At the same time, it is preparing to be spun off from parent Time Warner as a listed company in its own right.
The layoffs are expected to save AOL about $300-million a year, although it will take a $200-million restructuring charge in this year.
It is asking for staff to volunteer for retrenchment packages and will thereafter resort to layoffs.
AOL currently has about 6 900 employees, well down from its peak of 20 000 in 2004.
In 2002, AOL could boast 26,7-million subscribers, but this has dropped to 5,4-million today.