Gazprom Passes GE, China Mobile to Become Third-Biggest Company
By Greg Walters and William Mauldin
May 8 (Bloomberg) -- OAO Gazprom overtook China Mobile Ltd. and General Electric Co. to become the world's third-largest company by market value after its chairman, Dmitry Medvedev, became Russia's president.
State-run Gazprom, the world's biggest gas producer, rose 4.2 percent at 2:03 p.m. in Moscow today, pushing its value to 8.12 trillion rubles ($340 billion). China Mobile Ltd., which has more users than the U.S. has people, declined 1 percent to 2.63 trillion Hong Kong dollars ($337.2 billion). Gazprom overtook GE yesterday after the Fairfield, Connecticut-based company fell 1.3 percent to $325 billion in New York.
``It's reasonable to assume that Gazprom will continue to enjoy favorable regulatory treatment with Medvedev in the Kremlin,'' Steven Dashevsky, managing director of equities at UniCredit Aton, said by phone from Moscow today.
During Medvedev's six-year tenure, Gazprom's value climbed more than 32-fold as fuel prices rose and the company gained oil, electricity and coal assets. Gazprom's expansion, including buying OAO Sibneft from billionaire Roman Abramovich in 2005, helped Russia's government increase its control over national oil production to about almost half from about 6 percent at the start of Vladimir Putin's first presidential term in 2000.
Medvedev, 42, became Russia's third and youngest president yesterday, and then nominated Putin, 55, to be his prime minister. Medvedev will quit as Gazprom's chairman next month after a new board is elected, spokesman Sergei Kupriyanov said.
$1 Trillion Goal
Deputy Chief Executive Officer Alexander Medvedev, 51, said in a Moscow interview last year that Gazprom, which has a quarter of Europe's gas market, expects to be the world's biggest company and reach $1 trillion in value as soon as 2014. The two Medvedevs aren't related.
All 16 analysts whose Gazprom recommendations are compiled by Bloomberg have a ``buy'' or equivalent recommendation on the stock. The average price estimate is $19.66 (470 rubles), or 42 percent more than yesterday's close. Exxon Mobil Corp., at $476 billion, is the world's most valuable company, followed by PetroChina Co., China's largest oil producer, at $441 billion.
``In the era of scarce global natural resources, companies with significant reserves access are going to end up among the most valuable in the world,'' Dashevsky said.
GE stunned investors on April 11 when CEO Jeffrey Immelt said 2008 earnings will fall short of his previous forecast and first-quarter profit dropped at four of its six biggest units. The world's largest maker of locomotives and jet engines retreated the most in 20 years that day.
Immelt blamed the results on weakening credit markets. The collapse of the U.S. subprime mortgages market last year and the ensuing credit contraction saddled the world's largest financial institutions with $290 billion of writedowns and losses.
GE on April 23 raised its cost-cutting goal by 50 percent and said it will sell underperforming units.
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