Yandex NV (YNDX), Russia’s largest search engine, tumbled for a third day in New York on concern the company will struggle to preserve its lead against Google Inc. (GOOG) following the death of co-founder Ilya Segalovich.
Shares of Yandex, based in The Hague, slumped 1.8 percent to $32.76 yesterday, capping the longest slide in almost two months. Russia’s benchmark Micex Index traded little changed at 3:29 p.m. in Moscow after four days of declines. VTB Group, the nation’s second-biggest bank, slid 1.9 percent in London today.
Segalovich and Chief Executive Officer Arkady Volozh founded Yandex more than 20 years ago to turn the search engine into an almost $11 billion operation that controls more than 60 percent of the Russian market, beating Google. Analysts from Otkritie Financial Corp. to EVA Dimensions cut their recommendations on the stock since the death of Segalovich with the number of buy ratings sinking to a 13-month low. Apple Inc. (AAPL) has tumbled in the past year on concern about the lack of a new hit product since the death of co-founder Steve Jobs.
“Segalovich’s role at Yandex was comparable to Steve Jobs’s role at Apple,” Mansur Mammadov, who helps manage $100 million at Kazimir Partners in Moscow, said by phone yesterday. He said the firm sold all of its Yandex shares last month. “Competition with such a giant as Google is the major risk for the stock and it remains to be seen how the company is going to handle it without Segalovich.”
Apple lost as much as 3.9 percent in the seven weeks after Jobs’ death Oct. 5, 2011. The shares are posting the biggest 12-month decline since 2001 amid concern earnings at the maker of the iPhone and iPad will falter as low-end smartphone competition grows. Slowing sales and profit growth have put pressure on Apple to push into new product categories.
Segalovich, who died July 27 at age 48, and Volozh created software enabling a context search through the Bible on compact discs and in 1997 set up the Yandex.ru Internet search engine. The company said last month it signed an agreement to operate paid search results for Mail.ru Group Ltd. (MAIL), Russia’s largest social network.
“Segalovich’s death is the major risk for Yandex,” Alexander Vengranovich, an analyst at Otkritie in Moscow, said by phone yesterday. He cut the stock to hold on July 29. “Segalovich was the company’s brain when it comes to innovations and the market is yet to realize the longer-term risks for the stock following his death.”
Yandex lifted its annual sales forecast last month and reported second-quarter earnings that exceeded estimates as it benefits from rising demand in Russia for Internet advertising. The company, which last year got all of its revenue from Russia, will face the slowest economic growth since 2009’s contraction, according to a Bloomberg survey with 42 economists.
The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York declined 0.1 percent at 89.34. CTC Media Inc. (CTCM) dropped 1.8 percent to a five-month low at $10.62 after JPMorgan Chase & Co. cut its rating on the stock to neutral from the equivalent of buy, citing a “deteriorating outlook” for the second half of the year. Trading was almost double the daily average of the past three months.
The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, was unchanged at $25.70 in New York yesterday. The RTS Volatility Index, which measures expected swings in the stock futures, rose 1.6% percent to 23.58.
To contact the reporter on this story: Halia Pavliva in New York at email@example.com