Tony James is not afraid to take swipes. Whether they're directed at his boss, or at the media, you've got to give the guy credit for speaking his mind in front of a roomful of financiers and reporters.

The president of Blackstone Group spoke yesterday at a conference on private equity sponsored by The Deal about a wide range of topics -- when the market will recover, where Blackstone sees investment opportunities, and how debt should best be structured. **

But let's skip to the good stuff.

When moderator David Carey of The Deal asked James about the state of Blackstone's portfolio, Carey went straight for the jugular: what, exactly, is the deal Freescale Semiconductor? Specifically, Carey wanted James to respond to a recent BusinessWeek cover story titled "When a Buyout Goes Bad," which ripped apart Blackstone's $17.6 billion buyout of the company in 2006.

And respond he did.

"First of all, let me just say that if you want BusinessWeek to make your private equity investments for you, you're welcome to it," he deadpanned, before touting his confidence in the company's sound future.

It was a biting remark, and it wasn't the first one directed at BusinessWeek for its cover story. Bloggers at both TheDeal.com (in a post called "BusinessWeek's unnecessary bashing of the Freescale buyout") and Dealbreaker ("When a Buyout Writer Goes Bad") skewered the writer for her, shall we say, lack of financial acumen.

From TheDeal.com, co-authored by moderator David Carey:

The picture she paints is dire: "Given its huge interest payment, Freescale is having a hard time scraping up the $1.2 billion for R&D and $400 million for capital expenditures it needs each year to remain competitive," the story frets. R&D was cut to $1.13 billion, we later learn. Some slash.

Amazingly, there is no mention in the story of cash flows, which tell a very different story.

Dig just a few pages into Freescale's recent 10-K (on page 38), and you find that it had $1.525 billion in adjusted Ebitda last year. (The adjustment includes that $891 million in noncash charges related to "purchase accounting adjustments.")

Cash interest expense was just $760 million, and cap ex was $327 million. That left $442 million in free cash flow, after interest, cap ex and R&D. Freescale ended 2007 with slightly more cash on its balance sheet than it had a year earlier: $751 million versus $710 million.

Freescale may have its problems, but BusinessWeek's misreading of the financials was a lot uglier than this buyout.

But it turns out that James isn't only unafraid of bashing the media, he's also unafraid of knocking his boss, Blackstone chief executive Steve Schwarzman.

When asked about Blackstone stock, and why he thinks its shares have had such a dismal performance since their debut last June, James cut right to the chase:

"I think the I.P.O. cemented our position as the whipping boy for the industry. And some people may have raised their hands for it to happen. But I won't name names, since I work for him," he remarked with a chuckle.

Is James insinuating he thinks the I.P.O. was a mistake? Or that Schwarzman's headline-making, lavish 60th birthday party last year could have been a bit more subdued?

We won't venture a guess. After all, we don't especially want to rankle his feathers further. There's no telling what might get lobbed back.

by Megan Barnett

** If you really want to know, James thinks "we're in the eye of the hurricane" with regard to the credit market and the recovery will be slow and long; he sees investment opportunities right now in leveraged corporate loans, mid-sized companies looking for capital, and reestablishing businesses in certain hard hit sectors; he thinks companies should continue to be structured with the controversial covenant-lite loans they received during the height of the credit boom (they're more likely to lead to default, which is more likely to provide distressed investment opportunities for the likes of Blackstone. In James' words, they are "good for society at large.")