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AOL said to be considering layoffs

America Online CEO Jonathan Miller meets with top managers, detailing turnaround plans and hinting at layoffs to cut costs, a source says.

America Online CEO Jonathan Miller met Wednesday with top managers, detailing the division's turnaround plans and hinting at layoffs as a way to cut costs, according to a source present at the meeting.

The meeting occurred a day after Miller and leading AOL executives presented Wall Street with their ideas for revamping the troubled AOL Time Warner division. Executives highlighted new strategies to tap broadband users, to boost online transaction revenue and to shift their approach on selling online advertising, among other initiatives.

During a press conference after the presentation, Miller told reporters that there were no "across the board" layoffs planned for the unit. Miller added that the realignment of AOL's operations could result in some staff reductions, division by division.

Miller then presented the plan Wednesday to 250 of AOL's top managers at the company's Dulles, Va., headquarters, flanked by division vice chairmen Joseph Ripp and Ted Leonsis. The executives spent three hours walking through the strategic changes and emphasized the importance of executing the plan, the source said.

Cost management was a major part of the strategic realignment outlined during the meeting. Miller reiterated that layoffs would not be across the board but hinted that each division could see reductions, the source said.

AOL's strategic realignment comes at a crucial point for the world's largest Internet service. Over the past year, online advertising revenue has plummeted as long-term deals with other Internet companies have expired.

Corporate parent AOL Time Warner on Tuesday announced that the AOL division would experience a 40 percent to 50 percent drop in its online advertising revenue in 2003. During the investor presentation, Miller stressed that online advertising was an important part of AOL's revenue mix. Miller will reorganize AOL's sales team to rebuild frayed relationships with advertising agencies.