007's CIA connection

British defense company QinetiQ makes high-tech devices, and is said to be the inspiration for James Bond's Q.

By Nelson D. Schwartz, Fortune senior writer

(Fortune Magazine) -- When one walks into the London offices of QinetiQ, a British defense company rumored to be the inspiration for James Bond's Q, there is no bullet-firing briefcase - just a Cambridge-educated accountant named Graham Love, who became QinetiQ's CEO in 2005 and oversaw the company's IPO on the London Stock Exchange earlier this year.

The mild-mannered Love sits in an office that owes more to "Dilbert" than MI6 and insists that any link between his company and the Q character created by Bond author Ian Fleming is a myth. But the company does make some very nifty devices, like bullet-firing robots that American soldiers use in Iraq and Afghanistan.

Spy vs. spy: George Tenet is joining the firm that allegedly inspired the character Q.

In late October, Love reinforced his company's secret-agent rep with the appointment of former CIA director George Tenet to the board of QinetiQ, which was formed when Britain's Ministry of Defense research labs were privatized in 2003 (hence the 007 connection). "If you want to associate us with James Bond, feel free," says Love.

The appointment of Tenet isn't a cloak-and-dagger affair - it's about cold, hard cash. The U.S. currently accounts for 25 percent of the company's $2 billion in revenues and is QinetiQ's fastest-growing market by far, with sales up threefold in 2006.

And hiring Tenet - who ran the CIA from 1997 to 2004 - will help broaden QinetiQ's reach beyond the Pentagon. "The intelligence market is very important," says Love. Of course, it doesn't hurt that a major investor in QinetiQ is U.S.-based Carlyle Group, the ultra-insider buyout firm that counts among its alums George Herbert Walker Bush (conspiracy theorists take note: a former CIA director).

Key among QinetiQ's offerings is the Zephyr, a lightweight, solar-powered drone that can transmit data and pictures to controllers anywhere in the world. Unlike other drones, which fly for a couple of days at most, the 66-pound Zephyr can remain airborne for up to three months.

QinetiQ engineers see the product as ideal for long-range surveillance in places like the U.S.-Mexico border or the mountains of Afghanistan. More Bondian is QinetiQ's Talon robot (reminiscent of the Pet robot from "A View to a Kill"), a camera-equipped device the U.S. Army and Marine Corps are using to look for roadside bombs.

The Pentagon already has 600 Talons in the field and ordered another $43 million worth of robots and spare parts last month. A version of the Talon armed with a remote-control gun has been safety-tested by the U.S. Department of Defense and is now undergoing field trials by the U.S. Army.

The gun, like the robot itself, is controlled by a soldier with a joystick, who can be stationed up to a kilometer away. The Talon also comes with a replaceable arm, which costs a fraction of what it would to buy a new $100,000 robot. "And of course," says Jane McAlister, a commercial manager for Talon, "that's peanuts compared to the cost of losing a soldier."

So far, QinetiQ's stock market performance has been shaken, not stirred - it's off 7 percent since its London IPO.


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