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CompuServe lays off 500

America Online and CompuServe announce a reorganization that will see CompuServe laying off 500 employees and AOL shuffling around some top execs.

America Online (AOL) and its wholly owned subsidiary CompuServe announced a reorganization of their operations that will have CompuServe laying off 500 employees.

The CompuServe cutbacks are part of the company's effort to move its operations toward profitability, revitalize its service, and solidify its membership base. The number of layoffs originally was tagged at about 300 employees, but the company ended up trimming 500 members of its staff.

Displaced CompuServe employees will receive severance packages ranging from six months' salary to one year's-plus salary, depending on the number of years of service of the employee and his or her position within the company.

AOL's operations now will be organized into three different brands: AOL Interactive Services, CompuServe Interactive Services, and AOL Studios. The company said consolidation of its operations and infrastructure behind these three groups will enable AOL to create value more efficiently across its online and Web-based brands worldwide. (See related story.)

Shares of AOL jumped 11-15/16, to 110-7/16, following news of the restructuring, up 12 percent from Friday's close of 98-1/2. Nearly 7 million shares traded hands, over four times the average daily volume.

CompuServe also is in a multimillion-dollar deal with Tel-Save Holdings, a provider of telecommunications services. Under the terms of the deal, Tel-Save will offer long-distance telephone service to CompuServe members at competitive prices.