Telecom Operators

Yahoo and AOL’s parent company Oath to axe 2,100 jobs

Tim Armstrong, CEO of Oath, the parent company of AOL and Yahoo, confirmed the company will axe about 2,100 jobs from the two technology companies. Verizon, which owns AOL, closed its $4.5 billion acquisition of Yahoo's internet business. People began to receive notifications one day after the telco completed its $4.48 billion acquisition of Yahoo properties.

Caroline Campbell, a spokeswoman for AOL, said the company could not comment on the impact the layoffs will have on specific locations. The company acquired Baltimore mobile advertising firm Millennial Media in 2015 for $238 million and still has 2400offices at St. Boston in Canton. AOL also bought in 2004 for $435 million. That office is now under the ONE AOL advertising umbrella.

Many of the cuts are likely to be felt at the company's Silicon Valley offices, but that will be the product and engineering headquarters of the combined AOL and Yahoo which will continue to operate under their old names. The cuts will affect about 15 percent of the roughly 14,000 people in AOL and Yahoo's combined workforce.

The job cuts will come in overlaps in business functions such as human resources, but there will also be some from consolidation of products such as mail and advertising. Job cuts "will come across the whole Oath portfolio," Armstrong said during an appearance on CNBC, using the name that the combined companies will now operate under.

"We're not announcing any product changes now but there could be product changes in the future," he told CNBC. "Yahoo Mail and AOL Mail are areas where we may have different consumer front ends, but over time we would like to have their back ends consolidated."

The companies' ad systems are another area where consolidation is likely to occur. "We have multiple systems that we would like to merge to have a unified supply stack of technology and a unified demand stack," Armstrong said.

Most of those cuts are happening now but others could come in the future. "Over time, as in any business, if it makes sense to consolidate or make structural changes to the company, we will do those," Armstrong said.

Oath will also consider acquisitions in the future if good opportunities pop up, he said. "Right now we are very focused on the organic integration of our assets. That could change over time."

Oath, ultimately owned by AOL parent Verizon, will operate from dual headquarters in Sunnyvale, Calif. and New York.

"The Sunnyvale [Calif.] campus will lead the pack on product and engineering," Armstrong said. "I am looking at getting a place out here and spending a lot of time here. New York is going to be the connector to the media and advertising markets."

Armstrong said that despite the AOL-Yahoo deal being delayed by shocking revelations of massive hacking incidents, he is sticking to his goal of doubling Oath's number of users to 2 billion consumers and hitting between $10 billion and $20 billion in digital ad revenue by 2020.

Verizon is projected to see $1.5 billion in net global digital ad revenue in 2017 and Yahoo to generate $3.2 billion.

"The deal process took a little longer than expected so we are a little behind but we are staying with those goals," he said. "That is going to force us to be more creative and to work faster."

Armstrong said he isn't focused on recapturing the old days when most U.S. consumers used AOL and Yahoo as their front door to the Internet. Oath's content brands — which include HuffPost, TechCrunch, Yahoo Finance, Yahoo Sports and Tumblr — generate plenty of traffic, he said.

"If you look at where traffic comes from on the Internet today, Oath is one of the top four places in the world that consumers come in and out of," he said. "Long-term, whether we are the front door to the Internet or we are your favorite room, we have a house of brands that touches almost every major community and every major vertical. We have a business model to build brands that people love."

The parent company name of Oath drew some derision when it was unveiled, but Armstrong said it appealed to him because it implies a long-term commitment.

"It is meant to be a brand name that is about values," he said. "We want all of our brands and teams to be connected by values and principles. We think Oath is a great way to explain that. You don't make an Oath to something unless you want to be in it for the long term."

A lot will be known about the ultimate success of the company by what happens in the next 36 to 38 months, Armstrong said.

"Our teams know that we are starting from a lot of scale, a lot of assets and talent," he said. "But if I had to sum up in three words what we need to do, it would be, 'Build, baby, build.' That's our focus."