2000 jobs are on the go as the management team plans to reduce running costs amidst lower-than-expected advertising intakes.
In a letter sent by the CEO Randy Falco, he stressed "embarked on an incredibly complex and significant transformation as we fundamentally shifted our business model from a subscription-based ISP to an advertising-supported Web company".
AOL has had plans to compete with Google, Yahoo and Microsoft through a branch called Platform-A which was launched last month following the acquisition of three advertising companies AdTech, Third Screen Media and Tacoda.
AOL has shrunk substantially since its heyday as one of the biggest names on the interweb and like competitor Compuserve at the time, banked on closed, proprietary walled gardens to make money out of its subscriptions.
However, things turned sour when it merged with Time Warner and AOL has since seen its number of subscribers decrease from 30 million subscribers at its peak to less than 13 million early this year.