The beleaguered online service AOL has chosen Google Senior Vice President Tim Armstrong as its new chairman and CEO. Current Chairman and CEO Randy Falco and President and COO Ron Grant, who were brought in two years ago to turn around AOL, will leave after a transition period.
Time Warner Chairman and CEO Jeff Bewkes said Armstrong “helped build one of the most successful media teams in the history of the Internet” for online search advertising at Google. Bewkes said Armstrong will be able to help AOL grow its audience and programming businesses, and expand its advertising platform.
‘Great Choice for AOL’
Armstrong will have his hands full. AOL’s annual revenue dropped 20 percent last year to $4.2 billion, and the company is currently dropping about 10 percent of its workforce.
These most recent layoffs, begun early this year, will reduce the staff by about 700 employees. Since coming to AOL in 2006, Falco has also cut about 2,500 other jobs.
Many industry observers think AOL’s attempt to remake itself as an ad-based Web service, instead of a proprietary, subscription-based online service, still has a long way to go. Some are predicting that AOL will have to merge or spin off parts of its empire.
Andrew Frank, a research director at Gartner, called Armstrong “a great choice for AOL.” But, he added, whatever direction Armstrong takes AOL, it will be “dramatically different from today.”
The “least likely” scenario, he said, is that AOL will remain in the same structure as now, within Time Warner.
‘Spin-offs, Partnerships, Mergers’
What is “quite likely,” Frank said, “are spin-offs, partnerships, mergers or outright acquisitions” of the whole company or parts of it. He pointed out that the direction chosen will also need to address that AOL is actually two businesses — a consumer portal and an ad service.
In noting the accomplishments…