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Missile Defense

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?

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lchic - 12:57pm Apr 5, 2002 EST (#1110 of 1115)

... 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 Garaïalde, 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

lchic - 12:59pm Apr 5, 2002 EST (#1111 of 1115)

leap that the president would base decisions on that is to say that the president is corrupt."
http://www.redherring.com/vc/2002/0111/947.html

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Everyone got that ... now which 'bit' of the defense area does Carlyle not engage in ?

rshow55 - 01:02pm Apr 5, 2002 EST (#1112 of 1115)

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 slightly compromising.

Anyone who cares about what the United States is, and does, ought to be concerned.

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