EPAM’s Arkady Dobkin tried to appease investors worried about Russia destroying Ukraine and facing Western sanctions
Global fuel prices surged and stock values fell as Russian forces invaded neighboring Ukraine on Thursday morning. But few large US companies have as much at stake as EPAM Systems Inc., a software company based in Newtown, Bucks County, with technical staff in the former Soviet Union.
EPAM employs more than 40,000 people worldwide. That includes 13,000 in Ukraine, EPAM chief executive Arkady Dobkin told investors last week. EPAM has engineers and other professionals based in a dozen Ukrainian cities, including Kyiv, the capital, and Kharkiv, among the cities bombed by Russian forces.
Shares of EPAM opened 16% lower Thursday morning at $350 as images of Russian forces bombarding Ukrainian airports and towns were seen around the world. As of 3 p.m., the stock was down just 12%, at around $368.
Dobkin started the company in 1993, four years after the fall of the Berlin Wall, and grew it into a billion dollar (annual sales) multinational company by hiring engineers in former Soviet republics to writing and updating software for western companies looking for bargains. Dobkin also grew the business through a series of acquisitions.
Shares of EPAM opened 16% lower Thursday morning at $350 as images of Russian forces bombarding Ukrainian airports and towns were seen around the world. But the stock recovered somewhat, closing down 8.6% or $36.15 to $382.28,
Shares of the company had soared last year when EPAM was added to the S&P 500 index, putting it in the retirement portfolios of millions of American investors. But EPAM has lost nearly half its value since December over fears of war and likely Western sanctions against Russia and its ally Belarus, which served as a base for attacks on Ukraine on Thursday.
EPAM also employs local staff in several Russian and Belarusian cities, in Ukraine’s western neighbours, Poland and Bulgaria, and in the three Baltic republics, Estonia, Latvia and Lithuania, allies of the bordering Russian-held territory and watching Russia’s attack on Ukraine with alarm.
As recently as last Thursday, Dobkin, who was born in Belarus, downplayed the impact of what he saw as likely Russian actions against Ukraine during his company’s quarterly conference call with investors.
Asked by investment bank Barclays analyst Ramsey El-Assal whether EPAM’s work would be disrupted by a Russian attack, Dobkin said there was relatively little disruption when Russia seized some parts of Ukraine along the eastern and southern borders of that country in 2014, and he expected a similar situation. result this time.
He noted that EPAM staff now generally work from home and are not dependent on local telecommunications infrastructure. Even if systems are destroyed or disrupted, work can resume from other locations.
Some EPAM clients were very worried about the prospect of war in Ukraine, but the majority were not, Dobkin said.
The company has sought to become less dependent on Ukraine and its neighbors, particularly over the past year, noted Bryan Bergin, equity analyst at Cowan Inc., at the investor meeting.
Dobkin said EPAM has grown fastest in Latin America and India, but acknowledged that Russia, Ukraine and Belarus still account for more than half of the company’s output.
EPAM has not issued a statement on the Russian attack since it began. Company officials did not return calls seeking comment on Thursday.