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Big Tech Companies Exit Russian Market Amid US Sanctions

Over the past week, several big tech companies, including Apple AAPL, Microsoft MSFT, Intel INTC and DXC Technology DXC, announced exiting the Russian market. Their move is in the wake of the U.S. government’s Mar 24 announcement of cutting off the direct technological export to Russia as part of a series of economic and financial sanctions imposed on the country for initiating a military attack on Ukraine.

Ukraine, which was part of the Union of Soviet Socialist Republics, got independence in 1991. However, its continuously growing ties with Western Europe and the United States have not been going well with Russia. After months of growing tensions and military buildup across the border, Kremlin forces invaded Ukraine on Feb 21.

The ongoing war between Ukraine and Russia has resulted in market turmoil. The Dow Jones, the Nasdaq Composite and the S&P 500 indexes have declined 1.4%, 1.7% and 0.5%, respectively, in the past two weeks.

This unprovoked and unwarranted attack on Ukraine has led to extreme criticism worldwide against Russia. Though the United States, the United Kingdom and the European Union have restrained from taking any military actions, they have imposed economic and financial sanctions on Russia so that Kremlin pays a hefty price for its unprovoked attack on Ukraine.

U.S.-based tech companies have also expressed support for Ukraine and have stopped selling products as well as abandoned their ongoing and future projects in Russia. The iPhone and MacBook maker, Apple, was among the early tech companies that announced ceasing their operations in the country.

On Mar 1, AAPL announced that it will suspend its product sales in Russia. The company also said that it is halting all online transactions and exports to its partners in Russia. This also includes limiting Apple Pay transactions in the country. The stock is down 2.5% in the past two weeks.

On Mar 3, the world’s leading chip maker, Intel, announced that it condemns Russian troops’ invasion of Ukraine and has suspended all shipments to customers in Russia and Belarus. The company stated that it will continue to support all its employees, who have close ties in the region during this difficult situation.

The company has launched an employee donation and matching campaign through its Intel Foundation. The foundation has already raised more than $1.2 million for relief efforts and is working across Poland, Germany and Romania to aid refugees. Shares of Intel have increased 6.7% in the last two weeks.

Two Week Price Performance

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The maker of the Windows operating system, Microsoft, has also joined the chorus of U.S.-based tech companies that will temporarily stop business in Russia after its invasion of Ukraine. The company, on Mar 4, announced suspending sales of its products and services in Russia, in compliance with the U.S., European Union and U.K. sanctions.

Additionally, Microsoft pledged to beef up its cybersecurity in Ukraine and work proactively to help government officials in the country to defend against Russian attacks. The company is also working with the International Committee of the Red Cross and multiple UN agencies to provide technological and financial support to refugees. MSFT stock has gained 0.7% over the past two weeks.

Last Friday, DXC Technology announced that it is discontinuing its operations in Russia and exiting its market due to the Russian government’s unprovoked attack on Ukraine. The company said that it stands with every person, company and government calling for the immediate end of the Russian government’s unwarranted aggression on Ukraine.

The Tysons, VA-based end-to-end IT services provider has a substantial presence in Russia, with approximately 4,000 employees working in the country. DXC announced that it will match employee donations to the Red Cross humanitarian efforts at 200% to provide possible support, including financial, to its impacted colleagues and their families in Russia. The stock has lost 15.8% of its value in the past two weeks.

While Apple currently sports a Zacks Rank #1 (Strong Buy), Intel, Microsoft and DXC Technology each carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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