AOL Layoffs at Patch Aimed at Profitability

Patch will operate from 9 regional offices instead of 20

By Marc Bastow, InvestorPlace Assistant Editor

In an effort to bolster the bottom line at its struggling Patch news network, AOL (AOL) Chief Executive Tim Armstrong announced on Friday the company will institute a new round of layoffs.

The company also announced Patch DEO Jon Brod will be replaced by COO and President Steve Kalin.

The layoffs amount to around 40 employees from a staff of 140 according to a New York Times report, and the effort will result in the streamling of 20 regional offices down to 9. AOL is making the changes while continuing to support its service for over 1,000 communities.

Patch was founded in 2007  as a local content website focused on “community” news and information by, among others, Armstrong, and AOL purchased in 2007. After AOL’s split from Time Warner (TWX) in 2010 AOL announced it would put $50 million into the Patch venture, and Armstrong has been a strong advocate for the service.

Patch has struggled to gain both traction and profitability, although recent information from comScore as reported by AllThingsD shows a 26% increase in traffic compared to last year, representing 13 million unique monthly visitor.

Patch is hoping the streamlining effort along with the layoffs will move the operation towards profitability in 2013.

Written by Marc Bastow, Assistant Editor at InvestorPlace. Mr. Bastow is long TWX.

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