America Online (AOL) has denied rumours that it plans to cut over 20 per cent of the workforce at Compuserve's online division, which it is in the process of acquiring.
According to US reports, AOL had planned swingeing cuts, should the acquisition go through, as part of its overall cost cutting drive.
AOL denied that such decisions had been made and stressed that it intends to run Compuserve, which has been losing money, as an independent company.
An AOL spokeswoman refused to comment on the job cutting speculation. ?When the deal is completed we will have a thorough review of our operations. No final decisions have been made,? she said.
But mergers go hand in hand with job losses, according to John Moroney, an analyst at Ovum, although he believes all players involved are set to benefit. ?It?s a win-win situation,? he said. ?It frees AOL from the demands of network provision so they can concentrate on Internet services. They?re keen to develop things like communities of interest, which are a more personal form of chat-rooms.?
Compuserve shareholders are expected to vote through the complex three-way deal - first announced last September - which sees AOL acquire the online service division of Compuserve and its three million consumer customers, while Worldcom will pay around $175 million to take over AOL?s network subsidiary, strengthening it?s presence in Europe.
If this goes through as planned it will seal a separate partnership between AOL and its German publishing partner Bertelsmann, to combine their jointly owned French online service.
These combined transactions will, analysts estimate, catapult AOL to around six times the size of its nearest competitor.
Moroney believes that telcos will dominate the future Internet access market and that Worldcom could become ?the carrier?s carrier.?
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