News has been flowing out of AOL Time Warner(NYSE: AOL) faster than moviegoers flocking to the Lord of the Rings sequel.

Yesterday, we reported the media company's questionable disclosure of a goodwill writedown. Now there's news that AOL will spin off part of its cable operations in this year's second quarter, along with plans for more layoffs and further cost-cutting for the America Online division.

First, AOL will sell part of its Time Warner Cable stake in an initial public offering. Chief Financial Officer Wayne H. Pace didn't disclose what percentage would be sold, but he did say the cable operations are worth at least $6 billion. The first $2.1 billion generated from the offering is earmarked to pay down the company's debt. AOL hopes the spinoff will create a freestanding cable company capable of rapid growth through stock-financed acquisitions.

AOL also has big plans for its America Online division -- big cost-cutting plans, that is. The division has become a sore spot over the last few years, as declining advertising revenues have combined with stagnating membership to slow overall growth.

America Online's will cut its massive $1 billion marketing expense (you didn't think sending out a bazillion software CDs was free, did ya?), and other expenses face the knife, too. The company's negotiating new computer network contracts in an attempt to save money, for example.

Further jobs will be eliminated, though the exact number wasn't disclosed. Pace did say, however, that out of 18,000 employees, the bulk work in customer relations, and only about 6,000 to 7,000 make up the company's "core head count." Another 3,000 to 4,000 work in international operations.

Pace described 2003 as a "reset" year for America Online. That may be putting it lightly.

It should be interesting to follow the storylines as they play out over the next year. How much will AOL get for the cable offering? Will more cost-slashing heal America Online? Will the goodwill writedown affect its debt rating? We'll just have to wait and see.