AOL cuts 900 jobs after HuffPo buy

chart_ws_stock_aolinc.top.png By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney) -- AOL CEO Tim Armstrong said Thursday the company is cutting 200 jobs in the U.S. and 700 in India following its $315 million purchase of the Huffington Post.

Armstrong, speaking at the Bloomberg Media Summit in New York City, lamented the cuts but said AOL (AOL) is "much more healthy" than it was a few years ago.

"From a portfolio perspective, you need to continue to invest in things that make you profitable," Armstrong said. He added that he would address his employees about the cuts after leaving the conference.

Armstrong added that AOL's staff is moving toward having 70% of its staff be in editorial or other content divisions. That's up from a little more than half currently. He also said AOL intended to have more full-time workers and fewer freelancers.

AOL unloaded 40% of its cash on the Huffington Post purchase last month. As part of the deal, HuffPo founder Arianna Huffington became president and editor-in-chief of all HuffPo and AOL content.

At the conference, Armstrong said Huffington was moving to New York City Thursday.

"She is fearless, and she wants to do great things," Armstrong said. "I didn't know her that well, but we had spoken on a few panels together. She approached me saying that we had a similar vision."

Armstrong said the HuffPo buy was "a signal" to competitors about AOL's path and a reflection of his belief that the digital space "is only going to get bigger."

In the past year, AOL has spent $530 million on acquisitions as it focuses on becoming a content company rather than an outdated Internet portal. In a single week last September, AOL bought TechCrunch, online video distributor 5Min Media and social media company Thing Labs.

Armstrong also discussed AOL's dial-up business, which currently accounts for 40% of its revenue. He said that business "still has a few years," but AOL's annual yearly decline in that revenue stream is 25-29%.

"You have to reinvest in your content," Armstrong said. "Access to cash can be like a rich uncle -- you just get money and you never have to learn. It's time for that to change."

Armstrong implied the content acquisitions are a positive for the "bunch of big shareholders who hold onto the stock." He said AOL stock had a "pretty small float," and he noted that he invested $10 million of his own cash in company stock a few weeks ago.

Nonetheless, AOL's stock fell about 1% Thursday morning. Shares are currently trading near their lowest level since AOL was spun-off from CNNMoney parent company Time Warner (TWX, Fortune 500) in November 2009. The stock has dropped nearly 25% since its IPO.

But Armstrong remained optimistic.

"AOL will turn around. I have no doubt about that. The employees deserve a ton of credit," he said. "To go from managing a decline to managing growth is physically getting up and doing something different every day." To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,069.45 -10.12 -0.06%
Nasdaq 4,573.45 15.75 0.35%
S&P 500 2,000.31 3.57 0.18%
Treasuries 2.33 -0.01 -0.30%
Data as of 3:03pm ET
Company Price Change % Change
Bank of America Corp... 16.03 0.02 0.13%
Apple Inc 102.57 0.32 0.31%
Intel Corp 34.86 0.22 0.62%
Facebook Inc 74.70 0.84 1.14%
General Electric Co 25.92 -0.09 -0.36%
Data as of 2:48pm ET

Sections

Tesla shares hit a new all-time high Friday after the company announced plans to build 400 charging points in China. More

Gas prices are falling to nearly $3 a gallon in some parts of South Carolina, and that will soon be common in much of the country. More

Netflix told the FCC that its speed on the Comcast network became so slow that customers began dropping their service. More

Whether you've got wanderlust or an airline grievance, here are some apps to pack onto your phone. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.