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The firing took place during a conference call with more than 1,000 employees of Patch, the local news service AOL runs for hundreds of towns. Mr. Armstrong had convened the meeting to emphasize the direness of Patch's circumstances and prepare the staff for coming layoffs and management changes.
"If you think what is 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," Mr. Armstrong told the employees.
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But right after that statement he can be heard reprimanding Mr. Lenz, Patch's creative director, who was videotaping the meeting, then firing him.
"Abel, put that camera down right now! Abel, you're fired. Out!" Five seconds later, to stunned silence, he proceeded with his message.
In his letter to the staff, Mr. Armstrong further explained the reason for the firing, saying confidential meetings should not be recorded and that Mr. Lenz had been warned previously not to make recordings. AOL said Mr. Lenz would not be hired back but that Mr. Armstrong had contacted him to apologize.
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AOL has spent hundreds of millions on the Patch service, but has acknowledged being disappointed with its financial performance. During a call with analysts last week Mr. Armstrong said he would sell off or seek partners for as many as 400 of Patch's 900 local sites, a move that could result in hundreds of layoffs.
The extent of the layoffs are expected to be announced internally on Thursday or Friday.