AOL To Cut Quarter Of Workforce

AOL, a division of Time Warner, announced the cuts in a company webcast Thursday. The job cuts also could be accompanied by a sell-off of AOL's European Internet access units, according to a Reuters report citing an unnamed source.

The layoff news comes a day after AOL unveiled a major strategy shift that emphasizes advertising revenue as a core income stream. Plans call for AOL to start offering e-mail and other once-paid services for free in a bid to boost advertising sales.

Rivals Google and Yahoo both adhere to the advertising business model, and Microsoft is trying to move in that direction as well with MSN.

The once-proud king of online services, AOL has suffered since its blockbuster buyout of Time Warner six years ago. In that deal--at the time the biggest in corporate history--high-flying AOL acquired what was then considered a stodgy, faltering old-media company. The stock deal was worth $160 billion at the time.

In ensuing years, many have called AOL's Time Warner buyout one of the worst deals ever. AOL co-founder Steve Case, who engineered the deal, recently apologized publicly for it.