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To view the entire article, go to http://www.washingtonpost.com/wp-dyn/articles/A15898-2002Dec5.html America Online Cuts To Include Va. Jobs By David A. Vise AOL Time Warner Inc.'s Internet unit is planning to slash at least $100 million in operating expenses, including hundreds of jobs at its Northern Virginia headquarters, because of a sharp drop in advertising revenue and changes in business strategy, sources said yesterday. The cost-cutting is aimed at bringing costs in line with a projected plunge of 50 percent in ad revenue next year. America Online Vice Chairman Joseph A. Ripp, who is overseeing the spending cuts, told managers that no division of Internet service provider will be immune from a detailed review of its operating expenses, sources said. Decisions about where to make the cuts will be made over the next few months, sources said. America Online employs more than 5,500 people in Northern Virginia. Employees in New York, California and Ohio also may lose their jobs. The company also hopes to save money by cutting computer network expenses. Chairman and chief executive Jonathan F. Miller told Wall Street analysts this week that 2003 will be a "transition year" for the online unit, with double-digit revenue growth returning in 2004. The spending cuts are part of a broader effort by AOL Time Warner to restore credibility on Wall Street, where its stock and reputation have been battered by a failure to deliver promised financial results, and by federal investigations into misleading accounting practices before and after America Online Inc.'s merger with Time Warner Inc. in January 2001. After an internal review this fall, AOL Time Warner reduced previously reported revenue by $190 million and said it cannot predict what additional charges may result from investigations by the Justice Department and the Securities and Exchange Commission. AOL, the nation's biggest online service, provides 35 million subscribers with access to the Internet, online communications tools and content. Most subscribers pay $23.95 a month to access America Online with dial-up connections. To hold onto its subscribers amid heightened competition, the company plans to aggressively begin marketing a $14.95 a month service for AOL subscribers who want to retain access to America Online's e-mail and content but obtain high-speed connections from other providers. On Tuesday, AOL disclosed its dire ad-revenue projection while presenting a new business strategy to Wall Street analysts and investors. AOL Time Warner stock dropped more than 15 percent before recovering slightly yesterday, when it closed at $14 a share, up 16 cents. America Online's new business strategy is to get more money from current subscribers rather than counting on growth in advertising revenue or in the number of users. To do that, AOL plans to introduce and charge for various premium services, including a voice-mail service that will read e-mail to subscribers. It also intends to offer exclusive content from Time Warner's music and magazine properties, and an online version of CNN for broadband users. Wall Street is not convinced that AOL can achieve its goals. "The strategic direction to address the challenges is sensible, but near-term impact is limited and our concern that the continued decline in the AOL division would be severe enough to offset the strength of other Time Warner businesses is now a reality," said a new research report by Goldman Sachs & Co. The report, which concluded that cash-flow growth may not return to AOL before 2005, said the "odds of poor execution are quite high," given that America Online is trying to achieve the conflicting goals of growth and cost-cutting simultaneously. <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. 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