Carl Icahn often makes money in his corporate takeover attempts, but he is as flawed as a raider can be. His recent investments in Motorola (MOT) and Blockbuster (BBI) have done remarkably poorly. His work to get control of Yahoo! (YHOO) may turn out the same.

Icahn’s problem is very simple. He may "own" Yahoo! within a few weeks, but there is no guarantee he can sell it to anyone. Microsoft (MSFT) says it is interest, but that may simply be a feint. Nothing would serve Steve Ballmer’s goals better than Yahoo! in disarray with a new board and management that will take a couple of quarters to get their hands around a failing business. Microsoft can sit back and wait. Owning the portal company may not be as good a deal as seeing it implode. It is certainly less expensive to sit on the sidelines and watch the fun.

Bill Miller, the famous money manager at Legg Mason, has caught on to all of this. His company owns over 5% of Yahoo! He thinks Icahn needs to make sure that shareholders who follow him into Yahoo! make money. Miller told Reuters, "The difficulty with Icahn is he’d have more shareholder support if he would say he wouldn’t sell the company for less than $33."

And, it is impossible for Icahn to say that. Microsoft may leave him at the altar, even though at one point it said it would bid $33 for Yahoo!

The drawback to Icahn’s raiding approach is that shares often move up when he gets into a stock. Investors figure he can beat up management and make changes which will drive value higher. Often, that does not happen. Stocks trade up for a few weeks. Then Wall St. figures out that Icahn has no real plan or no real leverage to improve long-term value.

Yahoo! is starting to look like Motorola. Both are ugly as a goat.

Douglas A. McIntyre

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