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The social networking site's parent company, News Corp., saw a 47% dip in its operating income in the third quarter of its current fiscal year.
MySpace will lay off about 30% of its workforce under a restructuring plan that spans all American divisions of the company and will leave the social networking site with 1,000 U.S. employees.
"Simply put, our staffing levels were bloated and hindered our ability to be an efficient and nimble team-oriented company," MySpace CEO Owen Van Natta said in a statement released Tuesday. "I understand that these changes are painful for many. They are also necessary for the long-term health and culture of MySpace. Our intent is to return to an environment of innovation that is centered on our user and our product."
The division of News Corp. "grew too big considering the realities of today's marketplace," said Jonathan Miller, News Corp.'s CEO of digital media and chief digital officer.
"I believe this restructuring will help MySpace operate much more effectively both structurally and financially moving forward," Miller said in a prepared statement. "I am confident in MySpace's next phase under the leadership of Owen and his team."
The company did not provide details on the exact number of employees being laid off or the timing. It also declined to disclose severance terms or how much MySpace would save by reducing its workforce and eliminating nearly 500 U.S. employees.
News Corp. said MySpace plans to "return to a startup culture" and said its restructuring plans aim to make MySpace more innovative, efficient, and entrepreneurial.
The social networking site ranks second, behind MySpace, for popularity as measured by global users.
News Corp.'s operating income plummeted 47% in the third quarter of its current fiscal year, which ends June 30.