The Chief Executive Officer of AOL Digital Media Tim Armstrong has sent an email to the company's employees that triggered a gloomy Thursday morning for everyone. It seems the company has made the decision to lay off 5 percent of their manpower.
According to recent reports, Tim Armstrong, the CEO at Verizon Communications INC's AOL digital media unit will let 500 people go in order to keep things running smoothly after the company closed the deals on recent acquisitions.
As per Entrepreneur, the company's employees caught wind of the dreaded information via an email from their CEO. Apparently, the most affected parts of the company would be the corporate units, namely human resources, marketing, finance and communications. In turn, the resources that will be spared thanks to this cut will be redirected to AOL's other business inclined to mobile, video and data fields.
Reuters was able to share an email from Armstrong himself stating that this year, the company added more than 1,500 new people due to the new deals that were made. Later on, while adjusting to the new changes, it was discovered that there are a few areas that need more attention and resources in the name of improving operations.
Looking back, Verizon did purchase AOL for a whopping $4.4 billion in July 2015. The deal was made with the hopes of increasing revenue by utilizing mobile video and targeted advertising. Right after, AOL was able to nab a promising deal with Microsoft, they are now the ones handling the tech company's advertising technology. In turn, they purchased Millennial Media for $250 million.
Apparently, the workforce cutting was not because of Verizon's purchase of Yahoo Inc's core internet properties at $4.83 billion. It was a rather promising plan as they did strategize to combine the website's search, email and advertising tools with that of AOL's.
However, a surprising turn of events occurred when Yahoo admitted to being a victim of a huge data breach that rendered 500 million email accounts violated. Now the deal is in peril, perhaps to be canceled or renegotiated.
AOL is now assessing what should be done with the deal since Yahoo has come clean about the 2014 cyber breach. Either way, 500 jobs are to be lost in their company in order to properly shift resources.