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Summary:

A little over two years after returning to the portal business, Brad Garlinghouse is leaving AOL (NYSE: AOL) as president of the application…

Brad Garlinghouse

A little over two years after returning to the portal business, Brad Garlinghouse is leaving AOL (NYSE: AOL) as president of the applications and commerce group, GigaOm reports, citing unidentified sources. AOL representatives had no comment.

Update: Garlinghouse’s exit is part of what sources say was a planned reorganization of the consumer products business. In addition, CFO Artie Minson, who already is in charge of overseeing AOL’s dial-up access business, will now add the consumer products division to his portfolio of responsibilities as well.

Om Malik cites unidentified sources as saying the company is concentrating more developing its “media” businesses as opposed to applications since acquiring the Huffington Post in March. Still, AOL has been trying to ramp up its mobile and tablet applications over the past few months as it sought to extend its media business on to those platforms.

Garlininghouse is a respected digital veteran best known for authoring the 2006 Peanut Butter Memo when he was SVP – Communications, Communities, and Front Door at Yahoo.

Three years after joining Yahoo (NSDQ: YHOO) in 2003 as a VP, he wrote the memo as a “wake up call” to Yahoo management in bid to prod the company reinvent itself (“I’ve heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular. I hate peanut butter. We all should,” he wrote of Yahoo at the time).

Garlinghouse’s exit comes as AOL has as made significant progress in turning around its display declines. However, despite the recent quarterly gains, the company also appears to be losing against Google (NSDQ: GOOG) and Facebook, which are taking a greater share of that segment’s spending.

AOL is vulnerable to the charge that it is continually “reorganizing” and shifting strategies, implying that the turnaround plan charted by CEO Tim Armstrong inevitably hits a brick wall shortly after a direction is chosen and high expectations of an approach’s success fall a little short. That’s certainly one way of looking at it.

But there’s another view that suggests that AOL — a company that still has 3.4 million dial-up subscribers who, though their numbers continue to dwindle, pay $17.50 a month for internet access — needs to navigate a tortuous path that is being paved by the likes of Google, Facebook and the changing nature of online content and advertising in general.

In that sense, it’s entirely possible that this latest change makes sense for right now as the company fixes its gaze on a new goal post, even as things have been looking better. But it’s just as probable that there will be still more twists and turns over the next year, as the economy remains uncertain and AOL’s rivals take a bigger share of the display business it has been assiduously trying to capture for the last several years.

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  1. Here is a link to an org chart of AOL minus Brad from WikiOrgCharts http://bit.ly/pZKfJg 

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