AOL to lay off 700 employees

CEO Randy Falco cites deepening recession and desire to focus on core businesses as rationale for consolidation plan and 10 percent workforce reduction.

AOL will lay off 10 percent of its workers, about 700 people, to help it better deal with the deepening economic recession, according to a companywide e-mail sent on Wednesday.

The reductions, which will be completed by the end of March, will be accompanied by a consolidation of business groups and facilities as the company focuses on its three core businesses: Platform-A advertising, People Networks social networking, and MediaGlow content, AOL Chief Executive Randy Falco wrote in the e-mail, obtained by CNET News. Employees will also not be getting merit raises this year, he said.

"Reducing our workforce is never easy, particularly in the current climate, but our goal in doing this is to provide our core businesses the resources they need to thrive," Falco wrote. "Please know that, as always, we'll be doing everything we can to help and support those affected, including offering severance packages and other services."

Kara Swisher first reported the layoffs and reprinted the memo on her Boomtown blog.

An AOL spokesman said the company had no comment.

A decline in ad revenue at AOL helped lead to flat revenue and earnings at parent company Time Warner in its last quarterly financial report . Time Warner reportedly was in talks last year with Yahoo on a sale of AOL.

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