AOL to announce company reorg, report says

AOL Chief Executive Tim Armstrong will reportedly unveil a reorganization for the beleaguered Internet pioneer later this week that will combine the dial-up Internet service business with its Web services.

In addition to the AOL services group, three other business units will be created under the new structure, Armstrong told Bloomberg in an interview. Those units will consist of advertising, local services, and the Huffington Post media group, he said.

"We had AOL services split up between multiple groups," Armstrong told Bloomberg. "We have decided that putting them into the same structure, with the same cohesion, will help us with everything from registration services all the way to the experiences we offer in mail and the home page."

The applications and commerce group, which was run by Brad Garlinghouse before he left the company last month, will be part of the new services division. The reorganization is expected to be presented to AOL employees on Wednesday and take effect in January.

AOL hired Armstrong away from Google in 2009 with hopes that the Web giant's advertising sales guru would help revive the ailing AOL. However, Armstrong, who is best known for developing Google's online advertising business, has had trouble competing for ad dollars with his former employer, as well as Facebook and Yahoo.

While AOL has a large user base, the company has failed to keep up with Internet trends and is suffering from declining sales. AOL closed today at $14, up 2 cents. But the company's share price has fallen more than 40 percent over the past 52 weeks, trading as low as $10.06 in August.