What we have here is either an actual bug-eyed-insane AOLer gloating over his own company's failure in the Internet access business, or an equally bug-eyed-insane AOLer seeding lies to discredit Valleywag, defame AOL, or both. Either way, the grammar and spelling prove this tipster really is from AOL.

As obvious as it is that AOL's ISP branch is in trouble, this tip is nowhere near reliable. If you have info about this supposed massive layoff at AOL Broadband and AOL Narrowband, e-mail tips@valleywag.com. In the meantime, here's the tip. Try not to slip on the crazy.

This image was lost some time after publication.

AOL FANZ,

That's right, a BLOCKBUSTER AOL LAYOFF for the ages!!! Finally the show is almost over and the curtains are about to be drawn.... sources suggest that AOL is going to have a "75% layoff" of the Access business which is home to the AOL Broadband and AOL Narrowband departments.

This hatchet is expected to drop sometime between August and early October-06 timeframe however a "reorganization" is expected to be announced on or around the early Aug earnings call. The new AOL strategy will amount to shutting down AOL broadband because the economics do not work for the bundle — $6-7 in cost and $3-4 in bundled revenue per subscriber.

After the jump, there's more. Oh, dear reader, so much more.

AOL losses cash on each subscriber that they migrate over to DSL broadband deals. Hosting costs are to blame...but wait...there are over 25,000 servers.....Cable companies hosts costs are a few dimes a month per user not $5.00/sub/mo. And you might have though there were economies of scale....you thought wrong....

The Narrowband marketing engine is expected to also be shut down — no direct marketing, perhaps only the online channel will survive which is perhaps 10% of all sales. Over the last 12 months over 600 million CD-Roms were sent out with a ~0.5% response rate at $200 mm in cost. No more CDs in your mail box????? :-)

AOL has about 2 remaining choices which are currently being considered....

1) Make AOL Free so that there may be some potential long term AOL.com strategy before all 18 million remaining subs leave....hmmmm this smells like 1999 when NetZero came on the scene....AOL for free with advertising to the max to kill Netzero was being contemplated but never launched.

2) Reduce the unlimited narrowband cost from $25.90 (see below) to under $10 and compete head to head with NetZero, Juno, etc....the bottom of the barrell for the market. Well we know for sure that AOL will kill Netscape (low cost flanker) in either scenario....and Compuserve....that died a long time ago....what has not died that has been touched by AOL?

3) Let me see, what else could they do...split up the dial-up, broadband group, digital services, and AOL.com....DUH. [Sloppy scatalogical reference deleted — ed.]

GMAT question.....

$1.0 Billion (13-24 months ago) ————> $250 MM (Last 12 months)————————> $$ XX (next 12 months) ....

Did you get that right? Slap yourself on the back if you came up with $62.5 MM and high five your neighbor. That is what one could expect AOL to spend in the following 12 months on marketing spend in this death spiral. This is the "lights out" scenario that was considered 2 years ago but somehow some excellent BSer convinced someone at TWX to hold onto AOL.

If you were caught in the AOL hallways in 1997-2000 you would expect to give slap happy high fives as the stock went up...but little by little director by director, VP by VP, pure incompetence was being built...each dumber than the next..... TWX milked them dry - no new ideas or products....or if they were they were late, very late.

Remember the slogan..."AOL, so easy to use, it's no wonder we're number one"...well its no wonder they have not gone extinct yet without a product. They had a thick cushion but the air has leaked out. The lights are on and last call has sounded...and DAMN DOES SHE LOOK UGLY.....back to what is pertinent....

The only thing which will likely survive for some period of time will be the US AOL.com and the digital services unit as well as the international development of the India and Chinese portals....wait...aren't they like 20 years late on this? Ok, Ok...10 years but you get the point. Wasn't a ex-Sony exec fired in AOL Int'l for suggesting a portal strategy that went against the scared cow for the China JV deal in 2000? Hmmm....she got the last laugh...

Didn't Pitmann say "focus on Dial-up" in Summer 2002 just as he was canned and when the subscriber base peaked....hmmm....vision....

One thing to note is that the US portal is likely not really profitable on a standalone basis because 80% of the page views are generated by AOL subs which is falling fast if you have not noticed....even the portal as a stand alone does not look to have legs.

Also you probably did not catch it but AOL quietly raised the price of AOL dial from $23.90 to $25.90. What? Why not sock it to your customers with the slimmest choice.... the old folks who can't see their bills on their credit card statements without bifocals.... and those that cannot even get a broadband connection because their homes are not passable...

And if that is not enough how about this video:

http://www.nbc11.com/news/9406542/d… [Vincent Ferrari's AOL cancellation vid — ed.]

This is the big one you have been waiting for.

Expect AOL CC3, 4, 5, and 6 to be closed down and sold off. Perhaps only CC1 and CC2 and headquarters will remain. This should not be a surprise to anyone...the surprise should be....why didn't they do this about 2 years sooner.

Let the HBSers begin the best HBS case for the next 2 decades.

AOL RIP.

Right, glad that's over. Please, for the love of all that is holy, don't send this to Digg before someone's confirmed it.