Remember when we said AOL would be cutting 1,000 people from its ranks? That number is more like 2,500, reports Peter Kafka at MediaMemo. The company is aiming to reduce its staff by a third, to drop its operating expenses by $300 million.

To that end, AOL CEO Tim Armstrong is asking for volunteers to accept a buyout; employees have between Dec. 4 and Dec. 11 (post-spinoff) to decide if they want to accept. If the company doesn’t get enough volunteers, it’s layoff time.

This is terrible news for employees who will be getting an early “Christmas present” from AOL, but may be crucial for the company’s long term financial health.