AOL Slashes Staff at AIM Unit; Wider Cuts Expected

By NICK BILTON

Clarified Mr. Shellen’s departure.
On Friday, AOL notified more than 40 employees from its West Coast offices that they would be out of jobs by the end of the month. More cuts are scheduled in the coming weeks across AOL, according to a number of executives, who spoke anonymously because they were not authorized to speak on the matter, and former executives. The layoffs are expected to include more than 100 AOL employees.

The AOL Instant Messenger group took the deepest cut so far. A former AOL employee said the group was “eviscerated and now only consists of support staff.” This person, who asked not to be named because they were not allowed to speak publicly about the company, added that “nearly all of the West Coast tech team has been killed.”

Next up, AOL is expected to cut employees who work at Patch.com, the company’s effort in hyperlocal news. Other cuts are expected in smaller doses around the company over the next month.

In a statement given to The New York Times, AOL confirmed last week’s layoffs. A company spokeswoman declined to say how many employees had been cut.

“We are making some strategic but very difficult changes to better align our resources with key areas of growth for us as a company,” the statement said. “We remain committed to our presence in Silicon Valley and driving innovation in consumer products and mobile.”

Jason Shellen, vice president of the AOL messenger products who was based in the company’s West Coast offices and who once ran Thing Labs, is among those leaving. Mr. Shellen declined to comment, but AOL confirmed his departure.

Layoff rumors had been swirling around the company for several weeks. Kara Swisher on the blog AllThingsD reported that Mr. Shellen and Van Miltenburg, another AOL executive, would soon go, along with other employees.

Two employees familiar with the Instant Messenger group operation said the company now has close to $50 million a year in revenue from the product. Before the layoffs, the cost to keep Instant Messenger running was close to $25 million a year, they said. The company’s goal is to get these costs down to $2 to $3 million a year, generating more than $20 in additional profit.

One AOL employee added: “This is a numbers game at this point.”

There was recently a revamping within AOL, with a number of products being placed under Arthur “Artie” Minson, the company’s chief financial officer. Mr. Minson took over a section of AOL that is internally called M.A.M.A., which includes, Mobile, AOL Instant Messenger, Mail and About.me.

An AOL employee said Mr. Minson was the primary driver of the cuts and could make more in the future if he saw potential profit growth.

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