Turning Up the Heat

Want to know how Carl Icahn thinks? Icahn will tell you a story. He was at the Bellagio Hotel in Las Vegas a few months ago and played poker with professional gamblers. In a $40,000 game, he wound up as one of two players left in a hand of seven-card stud. Icahn had two pairs; his opponent was showing four to a straight. The pro tipped off Icahn that he had seen his cards and said that because Icahn was an amateur, he felt obliged to tell him so. The pro then bet the table max: $4,000. Icahn, who had been about to fold, announced to the table, "I learned a long time ago that in big business and big poker, there ain't no nice guys," and matched the bet. His two pairs prevailed.

The story says a lot about what Icahn's latest target, media giant Time Warner (which publishes TIME), is up against as the renowned Wall Street maverick pushes the company to boost its stock price, stalled at about $18. Icahn's prescription is strong (and expensive) medicine: a $20 billion stock buyback and the spin-off of its vast cable operations. Icahn, the Princeton University philosophy major from Queens, N.Y., who staked his earliest ventures with money he won playing poker in the Army, loves taking on the big boys. He won't be bluffed--and he often wins.

Icahn, 69, hasn't mellowed a bit since his corporate-raider days in the 1980s, when he made millions of dollars buying stock and forcing asset sales, stock buybacks and special dividends by the likes of Texaco and Phillips Petroleum. In the '90s, with notable exceptions like RJR Nabisco (in which he bought a stake and pushed the company to break up), he operated more quietly, in beaten-down areas of the bond market. But now he's back on the big stage rattling major corporations--and loving it.

In his latest adventures, Icahn owes a big assist to the $1 trillion hedge-fund industry, to which he is closely allied and which gives him financial heft he hasn't enjoyed since being backed by Michael Milken's junk bonds 20 years ago. And in the post-scandal age, yesterday's raider is today's shareholder activist. Icahn is playing that role to the hilt, lashing out at executive mismanagement and excess. In his view, corporate America is plagued by CEOs and boards compromised by cozy friendships and financial relationships--to the detriment of tough decision making and healthy share prices. Says Icahn: "Guys like me make management accountable."

It's not just talk. His coups this year alone include besting rival financier Wilbur Ross in a bidding war for textile firm WestPoint Stevens, forcing stock buybacks at energy firm Kerr-McGee and drug firm Mylan Laboratories, and (with a stunning 77% of the vote) landing three seats on the board of Blockbuster, the video chain.