US media-entertainment giant Time Warner will cut 10 percent of the workforce, or up to 700 jobs, from its AOL Internet unit to stem losses from a declining online advertisting market, reported Thursday the Financial Times.
"Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars," AOL chief executive Randy Falco wrote in an internal memo, said the newspaper.
According to Swiss bank UBS, AOL's profits from online advertising are set to fall 12 percent in the fourth quarter, reported the Times.
"We will continue throughout the year to carefully and thoroughly review all our products and services to make sure everyone fully supports our strategy and has the potential for growth," said Falco in his memo, stressing the cuts mean consolidation for parts of the company, without specifying which.
Time Warner, the sector leader which owns Warner Brothers studios, said earlier this month that it would take a writedown of $25 billion to reflect declining values of its AOL Internet unit along with cable and publishing operations.
The media giant has in the past explored the possibility of merging AOL with Yahoo! or Microsoft, and discussions on a deal are still ongoing, according to people close to the case.
New Yahoo! chief executive Carol Bartz is seen "as one catalyst towards progress in these discussions," said the Financial Times.
In the third quarter of 2008 AOL showed signs of strain as it tried to prioritize its advertising business, posting a decline of 634,000 subscribers from the prior quarter and a 2.6 million decline from the year-ago quarter.
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