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Tag: Mail.ru

Yandex IPO could pull in $1.5 billion

Russia’s largest search engine, Yandex.ru, is predicted to raise about $1.5 billion if they follow through with an IPO this year in London. The move would come on the heels of a successful IPO for Mail.ru Group Ltd. (LON:MAIL), Russia’s largest free email provider. Still, I expect Yandex to generate even bigger waves in the media than Mail.ru. Investors love search engines, and Yandex has proven it can compete with heavyweight Google, Inc. (NASDAQ:GOOG).

“While Google remains the undisputed leader in most major markets, there are some notable exceptions,” iSuppli tells CNET. “These include South Korea, Russia and, most importantly, China. In these markets, the dominant search engines belong to local operators, i.e., NHN, Yandex, and Baidu.”

Google’s the most visited Web site in the world and in the U.S., based on data from Alexa.com. Still, it can’t quite overtake Yandex in Russia. There, Google’s in fourth place behind Yandex.ru, Mail.ru and social networking site Vkontakte.ru, and according to stats from LiveInternet, Yandex’s share of the search market grew by 5.2% to 64.1% just in December 2010.

Yandex hasn’t released numbers on its profitability (or lack thereof), but the company did announce that its 2010 revenue increased 43 percent year over year to 12.5 billion rubles (roughly $420 million). Interestingly, the company has also expanded its reach beyond search in ways that Google hasn’t. It’s got Yandex Maps, of course, but it also operates an e-payments system in Yandex Money, a traffic app and Yandex Photos.

“Russian technology is just as good, if not better than a lot of similar US companies,” Yandex CEO Arkady Volozh tells Emma Barnett of The Telegraph. “Yandex has been able to keep ahead of Google because of the quality of its search and other key services. People will only leave a service if the quality starts dropping. In Russia, we have strong technological capabilities which shouldn’t be undermined.”

The biggest threat to Yandex’s future, though, might not come from Google. It might be the Russian government itself. Russian President Dmitry Medvedev has called for the creation of a national search engine in Russia; one that is owned and operated by Russians (unlike Yandex, which is owned by Netherlands-based Yandex N.V.).

Russian media have speculated that the government there has dumped more than $100 million into the creation of a national search engine. Oppositionists believe the national search engine would be used to censor content on the Internet in Russia.

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How to invest in Digitial Sky Technologies and Mail.ru

I’ve long been intrigued by the chance to invest in the Russian tech sector’s heavyweights: Digital Sky Technologies and Mail.ru. Digital Sky Technologies seems to have a knack for investing in major U.S. tech companies long before American investment banks have the guts to do so.

They were in early on Facebook (when Facebook had a $10 billion valuation), and they’re currently holding stakes in Facebook game and app-maker Zynga, Inc. as well as deal-of-the-day coupon company Groupon, Inc. All told, they’ve got a 10 percent stake in Facebook, and their partnership with Mail.ru entitles Mail.ru to a 2.4 percent stake in Facebook.

On top of its great investment portfolio, Mail.ru runs the largest free email service in Russia, two of the three largest social networking sites in the country, and it claims to be the largest social gaming company in Russia as well. The simplest way to invest in Mail.ru (and get a piece of the privately-held Digital Sky Technologies in the process) is to directly buy shares in Mail.ru.

In November of 2010, shares in Mail.ru started trading on the London Stock Exchange under the ticker MAIL. The stock’s up 30 percent since trading started two months ago.

Don’t have access to London-based shares? You could also consider an investment in the South African media giant Naspers Limited (ADR) (PINK:NPSNY). Naspers announced last summer that it had taken a “substantial stake” in Digital Sky Technologies according to Maija Palmer at FT.com.

Shares in Naspers have risen 44 percent over the past year. As an added bonus, Naspers also has a 35 percent stake in Tencent Holdings Limited (SEHK:700) – a company that’s often cited as China’s most profitable Internet company.

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