AOL to Shrink Global Presence in 2010

AOL will reduce its international footprint this year to cut costs and support product development goals.

Speaking at a Citi investment conference today, CEO Tim Armstrong said the company will withdraw from some of the 40 countries where it now operates to focus on core technology platforms.

“AOL’s international operations have been wildly unprofitable,” said Armstrong. “That has presented issues for us in terms of what we want to focus on.”

Armstrong did not specify how many or which markets AOL may flee, but said the company did hope to return to vacated regions “if we can get down to single platforms.” The company didn’t immediately reply to a request for more information.

“In 2010, you’re going to see a lot of bumpiness for us internationally,” as that process gets underway, he said.

In the 10 months since he took charge, Armstrong claimed AOL has made strides in product areas such as e-mail, content management systems, and the home page. By way of example, he noted it has cut the number of ads on the homepage from 17 to just one, which has helped shrink page load times and raise the ad rates it could charge for premium placement.

He said a future priority is to bring to the fore products seen as undervalued or “forgotten” after the Time Warner/AOL merger — products like Moviefone, MapQuest, and Winamp. He also praised the AdTech ad management platform, acquired in 2007.

He added other products will be shut down or sold, but declined to name them.

Asked about staff morale before he arrived, Armstrong said employees were downtrodden by the effect of failed merger talks with Yahoo, lagging product quality, and internal fragmentation.

“The culture was fairly negative,” he said. “When you’re not winning, that has very damaging cultural effects. One of the things we’ve been able to do is get new products out [and] show changes in current projects.”

Countering the morale lift is the effect an incoming round of layoffs will no doubt have on workers. This week, the company acknowledged it would resort to involuntary dismissals after a buyout offer failed to reduce headcount to AOL’s goal of 2,500.

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