About 1,000 employees working for AOL Time Warner's core internet division are to be laid off within the next few days in what is expected to be the start of a new round of redundancies at the company.
The cuts represent about 6% of the 16,000 jobs at the group's internet service division - often referred to as the company's crown jewel - which has suffered from this year's sharp downturn in the advertising market.
Some 720 jobs were cut from the internet division in January, when AOL and Time Warner officially merged. The combined media and internet company has already cut thousands of jobs from a total workforce of about 90,000 in an attempt to meet aggressive financial targets set before the extent of the global economic slowdown was known.
An AOL spokeswoman declined to comment on the latest round of job cuts yesterday.
Wall Street analysts said that they expected an announcement before the end of the week. The cuts are expected to hit all staff members at the division, though the marketing team is likely to be hardest hit.
Several analysts also made it clear yesterday that they expected further cuts before the end of the year.
Christa Sober, analyst at Thomas Weisel and partners, said: "There's still a lot of fat to cut within the company. Our understanding is that the cost synergies are going to continue to manifest themselves."
The world's largest media and internet group announced 2,400 job losses soon after the merger was finalised. All parts of the business were affected, but CNN, the cable news division of Time Warner, bore the brunt of these cuts.
The company has also announced plans to close its chain of Warner Bros Studios stores, leading to a further 3,800 job losses.
At the time of its merger, the company promised to increase revenues by 12-15% to more than $40bn (£27.6bn) and earnings before interest, taxes, depreciation and amortisation by 30% to $11bn.
Most analysts expect the company to struggle to achieve these aggressive targets because of the slowdown in the advertising market and the US economy. Mr Weisel believes that they can be met but only by further restructuring, strategic alliances and accounting changes.
Last week, the company indicated that it was considering further cuts in its latest filing to the securities and exchange commission.
"These restructuring plans are expected to be broadened to include additional restructuring initiatives in the third and fourth quarters as management continues to evaluate the integration of the combined companies," it said.
The filing came after the New York group revealed a worse than expected slowdown in revenue growth for the second quarter last month. The shares declined as much as 10% on the news but improved yesterday. They are still below the $55 reached in February.
It also emerged that the group's revenues from advertising and e-commerce fell below some Wall Street targets in the second quarter.
Revenue at the AOL unit rose 13% to $2.1bn in the second quarter, but some analysts had expected growth of 20%.
Other media groups have also cut jobs amid the advertising downturn, including Walt Disney and News Corporation. However, AOL Time Warner has been the most aggressive in terms of cuts and its financial targets.
The group is keen to expand overseas in a move to end its dependence on the US market. Last month, it bought IPC Media, the British publisher of consumer magazines such as Loaded and Marie Claire, for $1.15bn.
