I saw the headline and yawned. OK, I'm overstating. But was it a surprise to me -- or anyone -- that AOL is planning big staff cuts in conjunction with the company's much-ballyhoed free AOL email offerings? Hardly. Staff cuts in May were seen as only a small piece of an ongoing puzzle as AOL changes from a dial-up, ISP, customer service-based business to a content-rich advertising-based model.

Sure, 5,000 employees, a quarter of AOL's worldwide workforce, is a lot of people. And no one likes job losses. Except maybe investors, who should be pleased -- customer service isn't cheap and the focus is on cash flow or, as Time Warner likes to call it, OIBDA. Should be, but weren't. Although the stock sank only a few pennies today, to $16.65, TWX was down another 17 cents in after-hours trading on the news.

AOL staff on chopping block: is anyone surprised? originally appeared on BloggingStocks on Thu, 03 Aug 2006 18:24:00 EST. Please see our terms for use of feeds.

My sister Hannah is the answer to the question, why are AOL's subscriptions falling? A dabbler in the internet, she and her family paid for AOL dialup for years; even though she's now married with a real job, she's kept her AOL address from when she still lived at home with my parents. Last month, she called us to ask about this wonderful world of high-speed internet, and a few days later, Comcast came into her home and switched her over. She cancelled her AOL account.

Many like Hannah have kept their AOL account just for the email address. And though two-thirds of U.S. internet users now have high-speed internet access, AOL's user base is very different; approximately one-third of AOL users are high-speed customers, according to the AP. Yet Time Warner is rumored to be considering a very radical plan: making the coveted aol.com addresses free for users who have switched to other providers' high-speed services.

With Google, Yahoo! and Microsoft all offering a wide variety of free email options, and AOL's content now available to all comers, competitive strategy seems to dictate that Time Warner's decision should be already be made. Is board, who might say yes to the plan in their meeting this Thursday, will have to weigh the potential dollar losses (said to be $1 billion between now and 2009) against the untold customer goodwill and increased "eyeballs."

Continue reading AOL giving away the milk: will anyone pay for the cow?

AOL giving away the milk: will anyone pay for the cow? originally appeared on BloggingStocks on Mon, 24 Jul 2006 14:46:00 EST. Please see our terms for use of feeds.