David Cassel (destiny@crl.com)
Wed, 13 Nov 1996 14:31:48 -0800 (PST)
D a m a g e C o n t r o l ~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~ "America Online Cuts Its Staff by 5%" read the headline in today's Wall Street Journal. "The nation's largest on-line service handed pink slips to roughly 200 people in its various Virginia facilities," as well as employees in Vero Beach, Florida and Berkeley. Dozens more will be transferred from the Berkeley facility to a content developer in San Mateo, California papers reported. Engineers, programmers, content developers--axed. "For the first time since 1990, when it was a fledgling company with 150 employees, America Online yesterday reduced its staff, laying off 300 people," read the lead in Newsday. (http://www.newsday.com/mainnews/rnmi012y.htm) But despite the measures, AOL still can't shake investor cynicism. "Wall Street definitely appreciates a streamlining," Peter Krasilovsky of Arlen Communications told Newsday, "and AOL is very focused on driving up their stock price, so this may be a beauty makeover." "[P]robably window dressing with a definite eye on Wall Street," he told the Washington Post. "If AOL can't get its price up, it won't be able to do many of its expansion plans." AOL denied rumors that this was a tactic to save money. "This is not downsizing," spokeswoman Pam McGraw told C|Net. Mark Stavish, AOL's Vice President of Human Resources, offered a vaguer spin, telling the Post the 300 terminations were to "make sure that we're re-aligned and that people are focused on their new missions." "They're adding low-paid jobs and cutting some of the higher-paid divisions," Krasilovsky added. There's more bad news. 6% of AOL stock shares were put on the market by the parent corporation of Fidelity Funds. As one of the nation's largest investment firms, they'd owned 11.1 percent of AOL's stock; yesterday they announced they'd dumped almost two-thirds of it. "America Online declined immediate comment," the AP wrote, quoting an investor as saying AOL's new business models may have spooked the firm. Possibly hoping to counter unfavorable publicity, AOL issued a press release today saying PC Magazine ranked them highest "among online Internet services". There's just one problem--the magazine actually said "Online Services". "If you want to step into the Internet pool -- but also retain the comfort...of an online service--AOL is a good choice." AOL wasn't compared with thousands of ISP's across the country. Case defended the designation earlier last month. "Some of this is a technology-centric semantics debate that I think is lost on consumers," he said in our conference call. "Alot of the technology jargon we take for granted is something alot of consumers are kind of bored with." Fair enough. But in this case, the blurred distinction is working in AOL's favor. The press release also quoted PC Magazine as saying "AOL's technical support is very good"--but ironically, 30% of today's cuts come from technical support and billing. "Employees interviewed on the basis that their names not be used said the pink slips came as a complete surprise," the Washington Post noted. It was revealed that the $75 million charge announced two weeks ago included their severance pay--including salary benefits, and job assistance. "AOL and fellow computer service networks are losing customers to low-cost Internet service providers," the AP added to their story. But analysts are still mulling the implications of the fact that within two years, AOL's acquisitions of Redgate and GNN were jettisoned. THE LAST LAUGH The Atlanta Journal-Constitution's NetWatch noted that Sanford Wallace used a "Netiquette-busting all-capitals style" to scream "WE WANT SOME OF YOUR BANDWITH (sic) AND WE ARE WILLING TO PAY TOP DOLLAR FOR IT!" But they also reported that "Dave Cassel's AOL List" quoted the Sunday e-mail message. Not yet it hasn't yet... [That story is scheduled for later in the week.] Dave Cassel More Information - http://www.wco.com/~destiny/time.htm ~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~ Please forward with subscription information and headers in-tact. To subscribe to this moderated list, send a message to MAJORDOMO@CLOUD9.NET containing the phrase SUBSCRIBE AOL-SUX in the message body. To unsubscribe send a message saying UNSUBSCRIBE AOL-SUX to the same address. ~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~++~