Fortune article indicates that private equity buble is bursting. Is this true? I only noticed that one important guy in Bear Stearn is quiting, but that was for subprime...

Blackstone stock is performing badly. Is that an indication?

Yes, they both might be indications.

I suspect this is tied to growing risk aversion in the credit markets - watching the subprime mortgage market implode is making some wonder if lending umpteen billion for a buyout is that great an idea. Lately, various big corporate bond issues have had to rejigger their offering to attract enough interest. Blackstone is an indicator, although some of Blackstone's poor showing is due to their rather arrogant terms for shareholders. Blackstone and other PE firms are also facing potential U.S. tax law changes that will make them subject to corporate income taxes which are much higher than the capital gains taxes that they currently pay.

Another interesting thing is that Koninklijke Philips Electronics N.V quickly announced outsourcing deal with Infosys after its shares acquired by private equity... It seems that PE are pushing hard for result...

Blackstone did just manage to raise $21.7b - not bad - some of this probably pre-committed before the "credit crunch". So sentiment from equity side of PE looking good despite risk shocks, but debt providers still hesitant. May not pop a bubble but added costs will force PE to be both more discriminating in terms of targets, and cost cutting much more quickly/aggressively.