Russian web search firm Yandex's co-founder falls into coma

Reuters News
Posted: Jul 25, 2013 7:18 AM
Russian web search firm Yandex's co-founder falls into coma

MOSCOW (Reuters) - The co-founder and chief technology officer of Russia's market-leading internet search engine company Yandex has fallen into a coma after treatment for cancer, the Nasdaq-listed company said on Thursday.

Ilya Segalovich, aged 48, founded Yandex in 1997 with Arkady Volozh, the company's chief executive officer.

"He built up an inspired and incredible team of talented engineers who are the backbone of the company now," Volozh told reporters on a conference call after the company had earlier published its latest results.

The duo coined the name "Yandex" - with "Ya" standing for the Russian equivalent to English pronoun "I" - as Segalovich was experimenting with derivatives of words that described the essence of the technology. The full name originally stood for "Yet Another iNDEX" but today is synonymous with Internet search in Russian-speaking countries.

Yandex raised $1.4 billion in an oversubscribed initial public offering in New York in 2011 and it currently has a market value of $10 billion.

An analyst who asked not to be named said it was difficult to say whether Segalovich's illness will have an impact on the company's future.

"Every case is specific, but the risk is there for sure ... Look what happened with Apple after Jobs' death," the analyst said, alluding to Steve Jobs, the legendary co-founder of Apple Inc. Critics say that since his death the U.S. firm's pace of innovation has slowed, pressuring results.

Yandex had a 61.7 percent share of the Russian search market in the second quarter, ahead of Google and Russian rival Mail.Ru Group, it said on Thursday, and added that it now expects revenue to rise by between 34 and 38 percent this year, up from a previous forecast of 30-35 percent.

In April Yandex raised its forecast from 28-32 percent after its first-quarter sales increased by 36 percent.

The improved forecast reflected a "good performance of the core business" and revenues flow from a deal with under which the latter will use its contextual advertising technology, said chief financial officer Alexander Shulgin.

Second-quarter sales rose by 35 percent to 9.2 billion roubles ($284 million), driven by text-based advertising revenues which accounted for 88 percent of the total. Display advertising, the second-biggest source of revenues, gained 31 percent.

The company's net profit rose by 47 percent to 2.9 billion roubles, while adjusted earnings before interest, taxation, depreciation and amortization increased by 40 percent to 4.3 billion roubles.

Shares in Yandex were trading 2.3 percent higher at $31.51 by 1600 GMT, off the session's earlier high of $33.15.

($1=32.3817 Russian roubles)

(Reporting by Maria Kiselyova and Anastasia Teterevleva; Editing by Megan Davies and Greg Mahlich)