Beware that ‘seamless transition’

Slashing payroll might be standard business practice these days, but there’s still no good way to tell the public – your customers, in particular – that you are forced to lay off 25% of your workforce.

However, some ways of delivering that news are worse than others.

Exhibit A: EarthLink, the nation’s third-largest ISP, last week announced that it would pink-slip 1,300 of its 5,200 employees. More ominous than the raw number or the percentage is the fact that these cuts are coming in customer service and technical support. As part of the purge, EarthLink is closing four call centers.

Despite this obvious reason for concern on the part of EarthLink users, a company spokeswoman tried her best to smear lipstick on the pig: “This will be a seamless transition for customers,” she told IDG News Service.

What could that mean?

I suppose it’s possible that EarthLink has been carrying such a bloated service and support staff that lopping off that many workers won’t be noticed by anyone other than the poor folks left without paychecks. If that’s the case, though, company executives are going to owe stockholders an explanation, given that EarthLink has been bleeding rivers of red ink for years.

You might think that the company’s struggles have left it with fewer customers, and therefore a natural need for fewer service and support personnel. You’d be wrong, though. EarthLink says its customer base is going nowhere but up.

Maybe the company has deployed the latest and greatest call-center technology, thereby increasing efficiency to such a degree that those bodies are no longer needed. It’s a nice story; one the company likely would be telling if true.

Or perhaps the spokeswoman just meant that customers would see a seamless transition from good service to self-service.

The incredibly shrinking AOL Time Warner

The day their merger was announced, Jan. 10, 2000, America Online and Time Warner boasted a combined market capitalization of $319 billion. Last Wednesday, AOL Time Warner not only confessed to a mind-numbing 2002 loss of almost $100 billion, but was left with a net worth of only $62 billion. While it might seem odd to precede a number as large as $62 billion with the word only, what choice is there when describing a company that has kicked away 80% of shareholder value?

So is it any wonder that AOL Time Warner Vice Chairman Ted Turner last week joined former company honchos Steve Case, Gerald Levin and Robert Pittman in slinking away from this train wreck?

Whenever these supersized merger moguls fall – as most do – it’s amusing to take a peek at the press archives to see what they were promising back when the deal was announced. As expected, most of the AOL Time Warner blather three years back centered around “leveraging” this and “synergizing” that.

“By joining forces with Time Warner, we will fundamentally change the way people get information, communicate with others, buy products and are entertained,” Case vowed back then, no doubt never dreaming that the fundamental change would include his hitting the bricks.

But my favorite quote from the honeymoon phase was uttered by Turner, who described the rapture he experienced in casting his vote – then 9% of Time Warner’s stock – in favor of the merger.

“The excitement with which I did that matched the excitement I had 42 years or so ago, when I first made love,” Turner said.

Any guesses as to which event he’d rather forget now?

Don’t forget to write. The address is buzz@nww.com.