Is Foursquare's $2M Revenue Worth a Bidding War?

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Aug. 30 (Bloomberg) -- Bloomberg News' Doug MacMillan and Bloomberg Contributing Editor Paul Kedrosky examine why a bidding war may be brewing between Microsoft and American Express for a stake in Foursuare and whether the business is worth the effort. They speak on Bloomberg Television's "Market Makers."

Stocks hit a record this morning, up 12.4%. why?

The company had a solid quarter and forecast third-quarter earnings and revenue well ahead of wall street estimates.

The ceo has been adding marketing tools for the company's well-known customer relationship management, or crm, software.

I want to talk about stocks hitting record highs, but doughnuts are good, too.

Krispy kreme is beating on revenues but missing on earnings.

There you have it, year to date still a pretty impressive return.

And we come back, we will be talking about this clash of the titans between microsoft and amex.

The prize, a stake in the company that only had $200 million in sales last year.

Live from a bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle.

There is a bidding war at stake for foursquare come.

Valued at more than half $1 billion, it only brought into million dollars in revenue last year.

If you may wonder why microsoft and american express are competing to invest in this e- commerce company, for more, answers as well as particular points of view, we bring in doug mcmillon, who covers the tech industry from san francisco, and paul kedrosky from san diego.

Doug, i know there is a very split opinion on foursquare.

If you ask anybody in tech , they are pretty supportive of the company and dennis crowley.

If you ask people outside of tech, all they say is $2 million per year?

Who cares about this company?

Where is the middle ground?

It is the classic silicon valley story where they have a popular product people like and they have not figured out how to turn it into a business.

People like checking in and using the mobile app, but $2 million is not a business cap.

Paul, i know that "not really a business yet" line is something that gets under your skin with foursquare.

Do you think it is worth it for microsoft and annex to invest -- and amex syria to invest in this company for outreach to a younger crowd?

You know, it is such a complicated deal because people have twisted motivations.

Foursquare has strange capital structure given the debt round they did earlier this year, and they're looking for someone to put that data into equity or there is the central thing going on at foursquare that they would like to have happen with capital driving it.

Microsoft wants access to better local data because they worry about what is happening on bing and the transition from search to mobile.

Amex wants more on transactions with so much happening on paypal and even other credit card committees that have done better than they have inserting themselves into mobile.

Everyone has bizarre motivations and all other rationales go out the window.

Foursquare is a bunch of assets that a couple of companies with their own troubles see as potentially complementary.

Doug, what are people in silicon valley telling you, what is their opinion about these potential types?

Foursquare, for all its shortcomings, is a business with the failure to put together a strong case as a business.

People really acknowledge that it has broken through and done some thing special in terms of mobile and social and local.

These are all the flashpoints of what countries are striving to do right now.

They have collected all this really rich, valuable data about restaurants and shops and other places that people go to in the real world.

That is exactly what most technology companies are out to get right now.

Even though it is not bringing in a lot of revenue, there are a lot of valuable troves of data within foursquare, and microsoft especially is interested in that and amex is interested in bringing their customers this access to this rich data and is real estate in the mobile world.

Back for a moment to paul -- paul, wooded foursquare become a much different company under microsoft or amex?

If it goes to amex, it can no longer be sort of an open platform and engagement would be hard, it would seem, to get the visa/mastercard universe involved there.

If it goes to microsoft, it may be a little more open, but again, questions about how much support it would get from the likes of google and apple.

Yeah, i mean, this is a big problem, obviously.

This is not, as i understand it, reported to be a controlling interest in any form.

Nevertheless, these kinds of investments have a cooling off effect with regard to your attractiveness to other dance partners out there.

My guess is that microsoft sees it as a toe in thew water, a little like the google purchase of that is really company with all sorts of traffic data -- of that israeli company with also

This text has been automatically generated. It may not be 100% accurate.


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