AOL Lays Off 20% of Work Force

Confirming the rumors, AOL told employees Monday that it would lay off 2,000 workers, which amounts to about 20 percent of its total global work force. 1,200 employees will lose their jobs in the United States, with 750 cut from AOL's headquarters in Dulles, Virginia.

The layoffs come as part of AOL's continued transition away from Internet service provider to advertising-driven Web services. In a letter to employees, AOL CEO Randy Falco said when he came to the company, he knew such measures would be required. Pink slips will begin arriving tomorrow, and continue for the next couple of months.

"Everyone impacted by this reduction deserves our thanks and respect for their contributions to the company. We will aid these individuals in their transition to new opportunities as much as possible, most importantly with what we believe are generous severance packages," Falco wrote.

The new round of layoffs follow a massive cutback of 5,000 positions that occurred last fall. However, Falco notes that AOL has also added "hundreds" of new employees through a number of acquisitions, including advertising companies AdTech, Third Screen Media and TACODA.

"So where is this taking AOL? Put simply, my vision for AOL is to build the largest and most sophisticated global advertising network while we grow the size and engagement of our worldwide audience," Falco said in the letter. "We're only a year and a month into our transformation, and the turnaround has been dramatic. We're now in a position to win as an advertising-supported business."

But even if its transformation to advertising succeeds, AOL's fate is still up in the air. Investors are pushing Time Warner to decide on the unit's future, with many expecting the media giant to put AOL up for sale once it stabilizes, or spin off AOL's advertising business.