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The predator

Neal Blue, CEO of defense contractor General Atomics, has transformed the way the U.S. military fights wars. But it is his take-no-prisoners approach to business that has made him infamous.

By Barney Gimbel, writer
October 31, 2008: 6:44 AM ET

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Neal Blue, CEO of General Atomics, with a Predator drone in the Mojave Desert
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The Predator B, or MQ-9 Reaper, is twice as fast as the original Predator and can hold more weapons.
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Employees of a General Atomics company process yellowcake.

(Fortune Magazine) -- It's hard to pin down exactly when Neal Blue decided to start building weapons. It was probably in the early 1980s, around the time he bought much of Telluride, Colo., but before he began mining uranium and sometime after he gave up growing cocoa and bananas in the Nicaraguan jungle.

Back then Blue was a Denver oilman and real estate investor who happened to spend a lot of time thinking about how to defeat communists. He was particularly interested in seeing the overthrow of the Soviet-backed Sandinistas, who had recently seized control of Nicaragua. He had known the Somozas, the ousted ruling family, from his cocoa and banana days, and, well, he hated Reds.

Crippling the regime, Blue figured, was simple: just send GPS-equipped unmanned planes on kamikaze missions to blow up the country's gasoline storage tanks. "You could launch them from behind the line of sight," he recalls matter-of-factly, "so you would have total deniability."

Blue pauses, leans back in his white-leather swivel chair, and quickly adds that he had nothing to do with any of the Reagan-era operations there - nor, of course, did he launch his own attack. We are sitting in his small, sunny office near San Diego, not far from the Navy's so-called Top Gun Academy.

Behind him unfolds a rambling campus of 1950s-futuristic buildings, home to General Atomics Technologies Corp., parent of one of the most important defense companies in the world and the centerpiece of Blue's privately held - and secretive - business empire. Over the course of his five-decade career he's built a sprawling global business that spans four continents and enriched his family. But he has also made enemies and infuriated customers.

Blue is one of the last of the old-school industrialists, a breed that is all but extinct in professionally managed, post-Sarbanes-Oxley corporate America - a modern-day Howard Hughes (minus that whole starlet-dating, obsessive-handwashing part).

Through a combination of entrepreneurial instincts, bold legal maneuvers, and all-out bullying, Blue and his younger brother, Linden, have assembled assets worth billions of dollars (it's all private, so no outsider knows exactly how much), including an environmental cleanup firm in Germany, extensive uranium mines in Australia, real estate in Colorado, substantial oil and gas interests in Canada, and an airplane de-icing company in Iowa.

But General Atomics is best known for manufacturing one of the most important tools in modern warfare: the Predator, an unmanned spy plane that commanders in Iraq and Afghanistan credit with helping them fight insurgents. (The Pentagon recently announced that the Predator would increasingly take over the hunt for Osama bin Laden.)

"I once asked Neal how he does it," says Harold Agnew, the former director of Los Alamos Scientific Laboratory, who sits on GA's board. "And he said, 'My golden rule is to always buy straw hats in the winter.'"

Blue is a razor-sharp businessman, and interviews with dozens of Blue's associates and sparring partners suggest that he will do anything to maximize profit - even if it means violating agreements. And while some who have locked horns with him simply shrug their shoulders and move on, a few have taken him to court for breach of contract, fraud, and racketeering.

Blue admits to breaking contracts but won't comment on the rest. In Telluride, not far from where he grew up, the town even seized much of his land after a bitter fight with residents.

"I have used his house there periodically," says David Goldberg, Blue's friend and longtime business advisor, "and I have always advised my guests never to sit on the porch for fear of being 'duly rewarded' by the passing populace." (Translation: Duck and cover.)

Neal Blue is 73 years old but could easily pass for 50, thanks to his boyish face and fit build. Although shy in public, he's a good storyteller and speaks with authority about everything from John Locke to nuclear physics. Conversations can easily turn into often mind-bending monologues that last hours - a phenomenon some of his employees call "Blue-speak."

Blue's father was a real estate investor, and his mother the first woman to be Colorado's treasurer. He was a born opportunist. One high school friend remembers that during a public-speaking class he unabashedly played to the teacher's Catholic faith: When Blue was to practice giving an award, he presented a national championship trophy to the University of Notre Dame. When he had to talk about great architecture, he picked the Vatican.

"Everyone in the class would just roll their eyes," says Norman Augustine, former chairman of Lockheed Martin, who grew up with him in Denver. "But Neal got an A, and the rest of us didn't. That was vintage Blue."

It was also vintage Blue, friends say, to finance a road trip from France to India with his Yale buddies by selling articles to the New York Times and persuading Chrysler to donate a Dodge station wagon.

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