This was the shoe everyone was waiting to hear drop as AOL chief Tim Armstrong abandons his ambition to blanket the country with web sites offering hyper-local news. He told staffers at his Patch network of news destinations that 40% of them — about 480 people — will be laid off, media watchdog Jim Romenesko reports. AOL will continue to operate 60% of the sites. It will join partners to keep 20% open, and another 20% will either be consolidated or closed. “The people leaving Patch have played a significant role in making Patch an integral part of the communities it serves – and we thank them for their hard work and passion for Patch,” the company says. Today’s announcement comes about a week after Armstrong committed a colossal PR blunder by coldly firing Patch creative director Abel Lenz in the middle of a public meeting. The CEO later admitted it was a “mistake,” but excused his bullying as an “emotional response at the start of a difficult discussion dealing with many people’s careers and livelihood.” Armstrong helped to found Patch in 2007. Shortly after he became AOL’s chief executive in 2009, the company paid about $7M to acquire it. He also invested heavily in the operation, calling community-level advertising “one of the largest commercial opportunities online that have yet to be won.” As losses continued Patch shifted its focus away from journalism. Armstrong told analysts last week that it would provide a platform where people can “upload and share information.” He added that AOL’s “No. 1 North Star goal is to get Patch to profitability and to make the tough decisions around Patch to get there.” AOL shares are +5.7% over the last 12 months.