AOL’s Patch Layoffs Coming Friday
Last week, AOL CEO Tim Armstrong announced that he would shutter or try to find partners for up to 400 of his 900 local news sites. I don’t know if Armstrong was able to find takers for any of the sites, but we should learn more about their status when the cuts begin today.
If I hear more about their scope, I’ll update this post. If you’re an AOL employee who would like to share your story, feel free to reach me at firstname.lastname@example.org.
Armstrong co-founded Patch in 2007, when he was still running sales at Google. After taking the top job at AOL in 2009, he had the Web giant buy the local news startup, and since then has poured a lot of money into the venture, to the concern of AOL investors.
It’s relatively easy to understand Armstrong’s bet on Patch. No Internet company has truly cracked the local news and information business at scale. And if someone could do that, they could capture a huge pool of ad money that has yet to migrate to the Web.
But Patch hasn’t done that, either. Last year, it lost money on $35 million in revenue. Earlier this year, Armstrong promised that Patch would become profitable by the end of 2013.
But it’s hard to see how that would happen without significant cuts. As Bloomberg’s Ed Lee pointed out in June, even if Patch doubled its sales from last year, to $70 million, it would still be much less than its operating expenses of approximately $140 million.