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Technology has always found its greatest consumer in a nation's
war and defense efforts. Since the last attempts at a "Star Wars"
defense system, has technology changed considerably enough to make
the latest Missile Defense initiatives more successful? Can such an
application of science be successful? Is a militarized space
inevitable, necessary or impossible?
Read Debates, a
new Web-only feature culled from Readers' Opinions, published every
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- 12:57pm Apr 5, 2002 EST (#1110
... less profitable year for Carlyle.) "They are the new
breed of private equity, acting more like a large mutual fund of
private companies," says David Snow, editor of
PrivateEquityCentral.net, a Web site that tracks private-equity
firms. The numbers are impressive: Carlyle employs 240 people, as
opposed to the 10 or 12 typical of most private-equity firms. It has
ownership stakes in 164 companies, which collectively employ more
than 70,000 people. George Soros invested $100 million in the
group's funds; the California Public Employees' Retirement System is
in for $305 million.
Carlyle has succeeded by raising money first, then finding the
talent to manage it. For instance, it raised a fund for buying out
telecom companies and hired William Kennard, the former U.S. Federal
Communications Commission chairman, to run it. Accused early on of
being nothing more than a bunch of Washington grip-and-grinners,
Carlyle has proven its critics wrong. At a Salomon Smith Barney
private-equity conference last March, a panel of professional
investment managers were asked who the best fund managers are.
Carlyle cofounder Mr. Conway was one of two managers chosen.
With its size and success, questions about the firm's ability to
grow revenue has arisen. Carlyle has placed its bets for future
growth on the VC markets, which it entered in 1996. But to date, it
has found that venture capital is a game with far different rules
than that of corporate buyouts. "They may be very established in
private equity, but it seems to me that they don't really know the
venture capital business," says one VC who has done deals with
Carlyle. "In buyouts, you take over a company and fight the
management, but in venture capital it's the opposite. You want to
work with people."
Carlyle executives admit as much. As a result, the Carlyle Europe
Venture Partners fund has been slow to commit its capital. So far,
it has spent just more than 20 percent of its $660 million, and 3 of
its original 17 investments have already folded. None has gone
public or been acquired. As Jack Biddle, cofounder of Novak Biddle
Venture Partners, dryly puts it, "I haven't been involved in a lot
of venture deals where the participation of a president mattered
that much. In venture capital, it's all about the technology."
For a firm that has made its money in highly regulated,
politically charged industries, picking business-to-business plays
is hardly second nature. While Carlyle has investments in highly
regulated sectors like telecom and banking, it has avoided defense
entirely, instead focusing on tech industries that have already gone
flat. The firm's European fund alone boasts six B2B companies, two
optical-networking companies, and Riot-E, a wireless media play.
Jacques Garaļalde, managing director of the Europe fund concedes
that expectations have been shifted. "Clearly, we can't make 100
times returns on B2B, but there are some situations in which we can
make 3 times."
But the struggles in its VC business may be offset, at least
temporarily, by the expected windfall from the war on terrorism. The
federal government has already approved a $40 billion supplemental
aid package to the current budget, $19 billion of which is headed
straight to the Pentagon. Some of the additional government spending
is likely to find its way into Carlyle's coffers.
The Bush administration isn't afraid to mix business and
politics, and no other firm embodies that penchant better than the
Carlyle Group. Walking that fine line is what Carlyle does best. We
may not see Osama bin Laden's brothers at Carlyle's investor
conferences any more, but business will go on as usual for the
biggest old boys network around. As Mr. Snow puts it, "Carlyle will
always have to defend itself and will never be able to convince
certain people that they aren't capable of forging murky backroom
deals. George Bush's father does profit when the Carlyle Group
profits, but to make the leap that the pr
- 12:59pm Apr 5, 2002 EST (#1111
leap that the president would base decisions on that is to say
that the president is corrupt."
Everyone got that ... now which 'bit' of the defense area does
Carlyle not engage in ?
- 01:02pm Apr 5, 2002 EST (#1112
How much things have changed from Eisenhower's time, when a Chief
of Staff had to leave because he'd accepted a fur coat as a gift,
under conditions that were, by Bush administration standards, only
Anyone who cares about what the United States is, and does,
ought to be concerned.
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