AOL is reportedly planning to cut 20 per cent of its workforce.
Several media reports have cited a memo attributed to AOL president Randy Falco saying that the company will lay off about 2,000 of its 10,000 employees.
The cuts will reportedly be announced today. The company did not return a request to confirm the authenticity of the memo or comment on the reports.
In a reported copy of the memo posted on the Silicon Alley Insider blog, Falco said that the move would be among the final phases of the company's transition from an ISP into a broader web portal and advertising network.
AOL dominated the dial-up ISP market in mid and late 1990s as users discovered the web. However, as affordable broadband and dial-up rivals emerged AOL lost much of its user base. The firm recently abandoned its ISP role in Europe.
The memo outlines a new plan for the company, in which internet access will be combined with AOL's publishing and advertising business to create an ad-supported web network.
"This is in many ways the most difficult step, but a necessary one," said Falco in the memo.
"Put simply, my vision for AOL is to build the largest and most sophisticated global advertising network while we grow the size and engagement of our worldwide audience."
AOL will reportedly offer the affected employees severance pay and benefits ranging from two months to one year depending on their position within the company.
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