AOL Laying Off More Than 5% of Workforce, Unrelated to Verizon’s Yahoo Bid
Verizon-owned AOL said it will cut 500 jobs, or more than 5% of its global workforce, but said the layoffs are independent of the telco’s proposed $4.8 billion takeover of Yahoo.
An AOL rep confirmed the cutbacks, first reported by Re/code, but declined to comment further. When (or if) Verizon completes the Yahoo deal, additional layoffs are expected at both AOL and Yahoo.
AOL chief Tim Armstrong, in an interview with Re/code, said most of the layoffs will come in the internet media company’s corporate units, and that the reorg is designed to bulk up staff in mobile, video and data groups.
In a memo to AOL employees Thursday, Armstrong positioned the cuts as a move to streamline the company after it added more than 1,500 employees over the past year through the acquisition of mobile-ad vendor Millennial Media and the bulk of Microsoft’s advertising operations. “The changes we are making are about setting the company on a path to successfully operating in today and tomorrow’s reality,” Armstrong wrote in the memo, which was published by AOL-owned TechCrunch.
Verizon bought AOL for $4.4 billion in 2015, with the strategy of combining ad tech and content (from properties like the Huffington Post, TechCrunch and Engadget) with its wireless, broadband and TV footprint.
This summer Verizon announced plans to buy Yahoo — aiming merge AOL and Yahoo to gain even greater advertising scale across mobile, web and video users.
But in September, Yahoo disclosed that a hack in late 2014 had resulted in the theft of data on more than 500 million user accounts. That breach, which Verizon’s top lawyer said represented a material event, has led the telco to reevaluate the terms of the Yahoo deal and reportedly seek to lop $1 billion off the price tag.
Last week, Yahoo disclosed in its quarterly filing with the SEC that employees knew about the hack when it occurred two years ago. That was after the company claimed in a proxy statement in September that it had no knowledge of any security breaches. Yahoo also said it recorded expenses of $1 million related to the security incident for the third quarter of 2016.
The massive data theft has spawned 23 putative class-action lawsuits in U.S. federal and state courts and in foreign courts seeking monetary damages, according to Yahoo’s 10-Q filed on Nov. 9.
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