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AOL layoffs due next month

update Faced with continuing subscriber loss, America Online will cut 5 percent of its work force, a source says.

update America Online is expected to cut more than 700 jobs from its work force next month, as the online giant continues to struggle with declining subscriber numbers, according to a source familiar with the plans.

AOL, a unit of Time Warner, will likely make most of the cuts at its Northern Virginia headquarters, where it employs approximately 5,000 workers, the source said. The company overall has 13,000 employees throughout the United States.

The source added that job eliminations would begin in December and affect many departments across the board.

An AOL representative declined to comment. The expected layoffs were first reported by The Washington Post.

New layoffs would be just the latest restructuring the online company has undergone. In December, the company cut 450 jobs from its California operations, a move that included closing two offices and slicing the number of its software developers in half.

Soon after the layoffs, AOL began advertising a job opening for a global program manager to coordinate the outsourcing of software engineers in Bangalore, India, and Dublin, Ireland. AOL denied that the Bangalore and Dublin offices were related to the California layoffs, which mainly affected the Netscape Communications offices in Mountain View.

AOL saw its U.S. subscriber rate fall to 23.4 million in the quarter ended June 30, compared with 25.3 million a year ago. Overall, the company has lost more than 3 million of its $23.90-a-month premium dial-up customers, though that loss has partially been offset by gains in its standalone $14.95 "bring your own access" service.

"AOL's subscription trends have been in transition. The AOL narrowband, or dial-up service, has experienced significant declines in U.S. subscribers, which is expected to continue," according to a Time Warner report to the U.S. Securities and Exchange Commission. "Driving this decrease is the continued industrywide maturing of the premium narrowband business, as consumers migrate to high-speed broadband or lower-cost dial-up services."

In a move to bolster its subscription rate and retain those members it currently serves, AOL last month announced it will bundle McAfee antivirus software with its service for free, nixing its previous policy of charging $2.95 a month for the add-on subscription.

Also last month, AOL unveiled a redesigned logo and launched an aggressive advertising campaign. AOL did not disclose how much it will spend on the campaign, but TV commercials, print ads and a sponsorship during the Major League Baseball playoffs suggest the price tag was high.

Parent company Time Warner is scheduled to release its third-quarter results Wednesday.