AOL's Armstrong Sullies Reputation With On-Air Firing

NEW YORK ( TheStreet) -- If you haven't heard AOL ( AOL) CEO Tim Armstrong firing an employee in the middle of an already tense conference call last week with roughly 1,000 editors and reporters of the media company's hyper-local news site Patch.com, it makes for interesting listening.

The recording was obtained by Romenseko, the all-purpose media industry blog: Armstrong Talks Patch, Fires Employee.

The incident has resulted in some terrible publicity for Armstrong. Armstrong is widely perceived to be a reasonably nice guy, affable and friendly.

One Wall Street analyst told me that the on-air blow-up was strangely out of character for Armstrong, who is not known as the combustible type in the manner of say a Mel Karmazin, the former Sirius XM and CBS Radio CEO. Karmazin's tantrums were legendary.

But appearances can be deceiving, and given the high stakes of trying to turn around AOL, Armstrong apparently snapped. Abel Lenz, Patch's former creative director, who was said to be taking a photo of Armstrong during the call to be placed on an internal employee Web site, was very publicly fired. Calls and emails to Patch's media relations executives for comment weren't immediately returned.

For Armstrong, it may have been the final straw. Unquestionably, the AOL CEO has been under intense scrutiny and investor pressure to make Patch profitable, and over the course of the past two years, he hasn't done that.

During the now infamous conference call, Armstrong announced the closing of some 400 Patch sites out of total of about 900, and the replacing of yet another person to run the giant, disparate news site, with AOL executive Bud Rosenthal taking the place of Patch editor-in-chief Steven Kalin, who was sacked.

Whatever the back story to the Lenz firing, Armstrong was clearly already in a sour mood.

Employees on the call are admonished to work harder, demonstrate a greater commitment, or "leave Patch." Armstrong, who helped found the news site upon coming to AOL from Google ( GOOG)in March 2009, goes on to say that "if you don't use Patch as a product, and you're not invested in Patch, you owe it to everybody else at Patch to leave."

"If you think what's going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave Patch today," he says.

Moments later, Armstrong apparently sees Lenz and fires him: "Abel put that camera down right now. Abel you're fired. Out."

Armstrong told investors during the New York-based company's second-quarter earnings conference call on Aug. 7 that Patch will be profitable by the end of the year. That's not that too far away. Who might be next to go?

AOL shares, which have gained 26% this year, were falling 0.6% in mid-day trading to $37.29.

-- Written by Leon Lazaroff in New York

>To contact the writer of this article, click here: LeonLazaroff.>.

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