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You can say a lot of bad things about Yahoo!. The boys at Google stole the Internet out from under them. Chief Executive Jerry Yang choked when presented with a rich buyout offer from Microsoft. Its psychedelic corporate color scheme--yellow and purple--may cause seizures.

Don't dismiss the Sunnyvale, Calif.-based Web portal as worthless, though. Wall Street has self-destructed. The U.S. auto industry's business model makes no sense. Yahoo! (nasdaq: YHOO - news - people ), however, remains a cash-spewing machine.

So when corporate raider and Yahoo! board member Carl Icahn doubled down on Yahoo! in a Thanksgiving-week frenzy, after watching his previous investment lose $1 billion since buying 69 million shares of Yahoo! for $25 a share early this year, the question shouldn't be "Is he crazy?" The right question is: Has Icahn lost his nerve?

That's because Yahoo is overdue for a trip to the corporate chop shop. And while All Things Digital's Kara Swisher debunked a report over the weekend in the Times of London that Microsoft (nasdaq: MSFT - news - people ) would buy Yahoo!'s search business in a complex $20 billion deal that would place former AOL chief Jon Miller and former President of Fox Interactive Media Ross Levinsohn in charge of Yahoo!, some sort of deal seems inevitable.

That's in large part thanks to Icahn, who manage to scrap his way onto Yahoo!'s board this year and is only growing more aggressive by the day. Icahn spent $67 million for 6.8 million shares of Yahoo! stock in late November, according to the U.S. Securities and Exchange Commission. The move follows last month's announcement that Yahoo! is searching for a successor to Yang and boosts Icahn's stake in Yahoo! to roughly 5.5% of the company.

Who do you think is a leading contender for the Yahoo! CEO job? Check out what the market says (right).

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Yang basically lost his post after losing his nerve. First he dithered when Microsoft Chief Executive Steve Ballmer offered $31 a share for Yahoo!, at a time when its shares were going for $19.18 each. Then, after a series of halfhearted negotiations, Yahoo! ditched Microsoft for an ad partnership with Google (nasdaq: GOOG - news - people ). That partnership fell apart as well last month after U.S. antitrust authorities raised legal questions about the deal.

Enter Icahn. Yahoo! is a complex welter of businesses that has long added up to less than the sum of its parts. Last year Sanford Bernstein estimated Yahoo! was worth $54.3 billion, or $38 a share, when you add up Yahoo!'s cash position, stakes in Yahoo! Japan and China's Alibaba, and Yahoo!'s search, subscription and display advertising businesses. While that value has surely fallen, with Yahoo!'s market capitalization now at just $16 billion, chopping up Yahoo! is now a more attractive option than ever.

To top it all off, Yahoo! is still cranking out cash, reporting net income of $54 million on revenues of $1.79 billion for the quarter ending in September. While the figure is well below the $151 million in earnings it reported during the year-ago quarter, that is still pretty sweet compared with anything you'll see out of Detroit.

Making money on Yahoo! stock, however, could take some work. The recession will surely hurt Yahoo!'s earnings. Wall Street's chaos will make it tough to find buyers for chunks of the company, even if Icahn installs a management team willing to chop Yahoo! into bits. Laying off 1,200 full-time employees this month represents a first step. That will lop off more than $100 million in annual expenses in a hurry.

But let's face it, Icahn has a talent for making money on some pretty terrible businesses. He's picked over scruffy companies ranging from airline TWA to American Can. Maybe that's the problem. At Yahoo!, Icahn is sitting on a collection of franchises with a real future. It must be an unfamiliar sensation.