Back on April 7, Tim Armstrong sent a memo to the long-battered troops of AOL about a 100-day vision quest the new CEO and chairman was going on to find out “how to bring back the magic of AOL.”

It is now Day 86, and Armstrong is closing in on the end of a Where’s-Waldo commitment that he made then to visit all of the far-flung offices of the Time Warner (TWX) online unit globally.

More importantly, as it is almost over, Armstrong also has to make good on another promise he made in that memo he sent to the staff on his first day:

“The culmination of the 100-day process will end in Dulles with an All-Hands meeting in mid-July. At that meeting, we’ll review the feedback we’ve received–both internal and external. We’ll also discuss our strategic direction for the coming years, and highlight areas that will bring AOL and AOL properties into the next decade of digital leadership. Most importantly, we will set a course and focus all of our resources to make that course a success.”

BoomTown is eager to see what Armstrong has found out on his trip and what path it will ultimately put AOL on.

So far, the broad outlines of his strategy seem to center on expanding AOL’s content assets, strengthening its advertising network and getting out of businesses the company cannot compete well in, such as social networking.

What other pearls of wisdom Armstrong has gleaned are to still to be revealed, presumably.

His corporate version of “The Amazing Race” is certainly a novel idea, born at his first all-hands meeting in Dulles, Va., which used to be the world-wide HQ of AOL and remains its heart.

There, Armstrong (pictured here) joked to the crowd:

“I know that work goes on across the globe and, in the first 90 days, I’m going to try to visit every office we have and sit down and talk to every employee and that will be something that my wife has actually agreed to let me do so.”

Thus, spouse-approved, the former Google (GOOG) exec has circumnavigated the globe and has held meeting with employees in a wide range of places: Dulles; New York; Baltimore; San Francisco; Mountain View, Calif.; Toronto, Lancaster, Pa.; Denver; Hamburg; London; Paris; Bangalore; Dublin and, this week, Tel Aviv.

But it has not been all tourism, in search of innovation.

During this time, Armstrong has also dispatched employees and top execs, such as advertising head Greg Coleman and communications and communities head Joanna Shields, and hired a few key staffers of his own; announced a pending spinoff of the company; and bought some stuff (including a company he funded).

It will be interesting to see what comes next–after the 100-day gathering in Dulles, which should come sometime after Armstrong’s July 15 deadline, of course.

Party on, Tim.

Former Google (GOOG) exec Tim Armstrong officially started his job as new AOL chairman and CEO today and sent out a hello-there memo to the troops.

According to Armstrong, he is poised to “bring back the magic of AOL.”

BoomTown loves magic tricks and certainly hopes he can pull a rabbit out of the hat at the service, which was once the dominant player on the Web.

Armstrong is promising to look closely at AOL over the next 100 days, which “will end in Dulles with an All-Hands meeting in mid-July.” (Dulles is the Virginia-based AOL outpost that was once its world-wide HQ–it is now based in New York.)

There is homework too, AOLers!

But let’s hope it is not like the 100-day exam of Yahoo (YHOO) that did not work out so well for co-founder and former CEO Jerry Yang.

One sure sign of the seriousness of turning AOL around: While he has been getting ready to begin, AOL owner Time Warner (TWX) has been getting ready for Armstrong by putting in place conditions to allow AOL to spin out, seeking to amend debt agreements that restrict it from unloading the struggling business.

Here’s Armstrong’s entire memo:

AOLers -

Our work together starts today and we’re going to bring back the magic of AOL to our consumers and our partners.

As the world continues to move toward a digital information platform, AOL sits in a unique and venerable position. We’re a global digital brand and, thanks to your hard work, more than 275 million people across the globe touch AOL and our growing sub-brands every month. Billions of consumers and millions of businesses are making the digital migration, and we have a tremendous opportunity to help improve the experiences of all the people and companies making the transition.

We’ll make the decisions and the investments that are required to deliver exceptional value to our consumers. Consumers vote with their clicks and the time they spend on our sites, and we need to make world-class products and services that get votes based on a superior consumer experience. AOL’s partners and advertisers expect no less than our consumers, and we need to hold ourselves to delivering industry-best business solutions.

Over the next 100 days, I’ll be running a process to hear from all of you and many of the important partners connected to AOL. We’ll sit together in our offices around the world and have open forums about what we’re building for the future and what we’re accomplishing today.

The culmination of the 100-day process will end in Dulles with an All-Hands meeting in mid-July. At that meeting, we’ll review the feedback we’ve received–both internal and external. We’ll also discuss our strategic direction for the coming years, and highlight areas that will bring AOL and AOL properties into the next decade of digital leadership. Most importantly, we will set a course and focus all of our resources to make that course a success.

The road to Dulles in July starts this week with meetings in New York, Dulles and a Town Hall meeting with the team in Baltimore, and I plan to visit all of our global offices in my first 100 days. It is important for you to think about how AOL’s mission should be captured–how we can deliver exceptional value for consumers and partners, how we can encourage innovation, and how we can continue to make AOL an even better place to work. If you have thoughts before we meet, you can post them here and I will read them as we travel to all the offices.

Joining you today is a privilege and an honor. Over the past few weeks, I’ve had many opportunities to talk to current AOLers, AOL alumni and our partners. Each of them asked how they could help AOL revive the spirit we talked about in the tent in Dulles a couple of weeks ago–a spirit of dreaming big and delighting consumers every time they touch our brands. Jeff Bewkes and the leadership across Time Warner are putting their full support behind making AOL as successful as it can be. Now it is up to us to deliver on AOL’s full potential.

Thanks for having me and let’s set our sights high and our execution even higher. Go AOL.

- TA

As BoomTown reported earlier today, AOL was abuzz with the rumors that former execs from the online service’s glory days, including still controversial former CEO Steve Case (pictured here), might make an appearance at a huge staff pep rally called by its new CEO Tim Armstrong.

And so Case did show up in front of a cheering crowd this morning, along with former AOL vice chairman Ted Leonsis.

Considering that many at Time Warner (TWX), which owns AOL, still harbor resentment towards Case about the disastrous merger between it and AOL a half-decade ago, the move is groundbreaking for the troubled online service and perhaps a sign that it is finally time to move forward.

In related news, Sasquatch will appear on the Time Warner-owned CNN’s “Larry King Live” show tonight.

The appearance by Case took place on AOL’s former HQ in Dulles, Virginia, on the tented lawn of the sprawling campus for the company, which only a decade ago was the dominant online powerhouse.

The event was broadcast to the AOL empire worldwide, reaching thousands of employees, and included all of AOL’s top execs and several from Time Warner, such as General Counsel Paul Cappuccio and CFO John Martin.

Leonsis, who gave a “lucky” green tie to Armstrong, engendered cheers as he spoke of the importance of change.

But it was Case’s entry that was a shock to the standing-room only audience of 1,000. He told the crowd that he would be a “cheerleader on the sidelines” for AOL.

Both Case and Leonsis talked about putting the past behind the service–and there is a lot of past to put behind, I might add, between AOL and the media giant–and were very supportive of Armstrong.

Armstrong, who was a key advertising exec at Google (GOOG), made the point of joking that Case and Leonsis were “on the payroll” at AOL again.

Armstrong focused mostly on AOL products, rather than its troubled history, employee morale and the importance of reviving the famous but tarnished brand.

And to get AOLers jazzed again about reviving the service, Armstrong asked rhetorically: “Are you committed to putting America back online?”

Here is the letter AOL CEO Randy Falco (pictured here) has penned to the entire staff about layoffs of 10 percent of its workforce–or 700 people–and other cost cuts, which the online service is announcing today.

“We’re at a pivotal point in AOL’s transformation, and need to be even more strategically focused and operationally efficient as we weather the economic storm,” wrote Falco, in part, about the move.

As BoomTown reported earlier today, Time Warner (TWX) online unit AOL is making huge staff cuts, due to the weak economy and the ensuing deep falloff in advertising revenue, but also because of recent structural changes made to refocus the once-mighty service.

The layoffs will take place over the next several quarters, with most of the U.S. cuts to be completed by March. AOL has 7,000 employees world-wide, with most located domestically.

Here’s Falco’s letter:

Dear AOL colleagues,

I’m writing to tell you about some important decisions we’ve made about AOL’s business and why we’ve made them.

The deepening economic recession has affected every corner of the economy, including our own. Online marketers have tightened their ad buying across the board, reducing their spend by hundreds of millions of dollars.

As a result, we will be reviewing our entire organization to further align resources and expenses against the real revenue opportunities in this difficult market. Part of this will involve consolidating groups to gain efficiencies that will unfortunately lead to head-count reductions. We anticipate this will result in a net reduction of our workforce of up to 10% over the next several quarters–and we will attempt to finalize all domestic actions by the end of March. Reducing our workforce is never easy, particularly in the current climate, but our goal in doing this is to provide our core businesses the resources they need to thrive. Please know that, as always, we’ll be doing everything we can to help and support those affected, including offering severance packages and other services.

To further keep employment costs down, we will also forgo merit pay increases in 2009. This is a painful decision, but one that many companies have prudently taken to help minimize the number of layoffs they have to make.

To provide some perspective on these decisions, right now we’re two years into a three-year turnaround plan. Since day one, our strategy has focused on building and growing mutually dependent publishing, advertising and social media businesses to take advantage of the shifting media landscape. We’ve worked shoulder-to-shoulder to make considerable progress during this time.

We acquired best-in-class companies across the digital advertising space (AdTech, Third Screen Media, Lightningcast, buy.at, TACODA and Quigo, respectively) and integrated them with Advertising.com to build Platform-A, the largest, smartest display advertising platform in the world.

We grew our MediaGlow audience via an efficient content development model that in 2008 enabled us to launch more than 20 new sites that are generating significant page view (up 64% year over year in December), engagement (up 39% year over year) and unduplicated user (70+ million) numbers. This momentum will continue in 2009 with our goal of creating an additional 30+ editorially curated sites focused on consumer passion points.

We combined Bebo with our longtime community assets AIM and ICQ as well as newer acquisitions Goowy, Yedda and SocialThing, to build People Networks, gaining AOL a foothold in the critical social media space, with more announcements to come on the next phase of development in both the social media space and in the integration of social and publishing capabilities.

This progress continues to put AOL in a strong position to capitalize on our new business model when the recession ends.

In addition to focusing our investments, a successful turnaround plan also requires us to realign our cost structure against this three-pronged business model–making difficult decisions to cut costs in areas that aren’t critical to our growth. Splitting out the Access business improved the transparency of what’s working and what’s not, and allowed us to make better decisions about exiting businesses that weren’t performing while investing in growth areas. A successful turnaround plan also mandates we control costs, operate with healthy margins and position the company for sustainable growth. As you know, we’ve moved repeatedly to bring discretionary expenses in line to spare across-the-board job cuts.

But we’ve also had to make many hard decisions along the way. And this moment is no exception. We’re at a pivotal point in AOL’s transformation, and need to be even more strategically focused and operationally efficient as we weather the economic storm.

In addition to the head-count reductions and the 2009 merit pay decision, we are also making changes throughout the organization to improve efficiency and better align it to our three core businesses. This includes a review of our international operations and our global shared-services functions. In addition, we will continue throughout the year to carefully and thoroughly review all our products and services to make sure every one fully supports our strategy and has the potential for growth.

Finally, we are going to realize significant savings by continuing to consolidate our facilities–for example, moving from two buildings to one in Mountain View, from two floors to one in Los Angeles, and leasing unused space on our Dulles campus.

With these and other changes, we will take significant annual run-rate costs out of our business while, importantly, retaining the flexibility to invest in our growth strategy.

I know all this will raise questions, but I wanted to share as much as I could with you now. Senior management will provide more details as appropriate to their teams in the weeks ahead.

As difficult as things look right now, the economy eventually will turn around. Some companies will use this time prudently and make difficult decisions to come out of it in better shape–growing toward areas of opportunity, scaling back in others and maintaining a line on costs all around. Our only choice is to be one of these companies. With your continued hard work and dedication, we will position ourselves to emerge a stronger company ready to lead in a vibrant online market.

Randy

Time Warner online unit AOL is cutting 700 employees due to the weak economy and the ensuing falloff in advertising revenue, but also because of recent structural changes made to refocus the once-mighty service.

AOL CEO Randy Falco sent a memo this afternoon to AOL staff about the layoffs and other cost cuts being made, confirming the moves.

The 10 percent reduction in workforce will take place over the next several quarters, with most of the U.S. layoffs to be completed by March. AOL has 7,000 employees world-wide, mostly located domestically.

AOL is also eliminating merit raises, just as Yahoo (YHOO) and other digital companies have done recently, and consolidating facilities.

While Time Warner (TWX) has been trying to sell AOL to Yahoo, the online unit has also been shifting its resources, as part of a long-term turnaround plan. It has focused the company on three parts: its Platform-A ad unit; its communications and social-networking arm, People Networks; and its recently launched MediaGlow content studio.

It has also been in the midst of splitting out its longtime access business, which has provided the bulk of AOL’s revenues and profits, which sources said has given its top execs insight into what its future business model should be.

Besides the layoffs and cost cuts, sources said AOL was also looking at paring its international business, which has never been particularly successful.

As part of its ongoing moves to make New York its main HQ, AOL will also be consolidating facilities in Silicon Valley, Los Angeles and at its original homestead in Dulles, Va., although not closing it completely.

Much as throughout the online advertising industry, AOL has seen drastic declines in growth. In a recent financial report, AOL said its ad business dropped almost 20 percent year over year.

And AOL’s worth has also declined, with Google (GOOG) recently writing down its 2005 investment of $1 billion in the online service, which valued it then at $20 billion. It is now valued at $5.5 billion.