The layoffs announced Tuesday amount to about 7 percent of AOL's overall work force and are the largest since the Time Warner Inc. Internet unit cut those 700 positions last fall. AOL has about 20,000 employees worldwide.

AOL's subscription base has been declining as more Internet users drop dial-up connections in favor of broadband. The company had 18.6 million U.S. subscribers as of March 31, down from a peak of 26.7 million in September 2002. But while U.S. subscribers dropped by about 22 percent in the past two years, inquiries to AOL's customer-service representatives declined even more.

In its early days, AOL had a reputation for attracting beginners, leading some longtime users to deride the service as the "Internet on training wheels."

But AOL dropped some of its hand-holding over the years and began offering its subscribers computer-diagnosis, anti-spyware and other free software, "allowing them to troubleshoot on their own," Graham said.

In addition, he said, AOL has been expanding its online help areas, such that 8 million customers a month now look up information themselves online, compared with 5.5 million who interact with a human by phone, e-mail or online chat.

"They are able to accomplish with a couple of clicks what it used to take them a phone call or two or three to accomplish," Graham said.

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Contributing: Associated Press, Bloomberg News

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E-mail: bwallace@desnews.com

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