Judging by the news flow on Yahoo, the fate of the world's top Internet destination has turned into a dizzying, confusing dance among every other Web giant that doesn't want to end up one day in exactly the position Yahoo now finds itself – with investors and customers questioning whether it has the mojo to persist as an independent, thriving company. Thus you have the on-off-maybe-sort-of-on deals with Microsoft – which dropped its $42-billion (U.S.) takeover bid in May – and persistent reports News Corp. (via MySpace), and AOL are all in various forms of do-si-do around Yahoo.

Jerry Yang, Yahoo's co-founder and his board, have not entirely quashed the speculation and has since proposed a linkup with Google, a move that gives the rest of the group hives. All this jockeying could actually go on for some time were it not for one complication: The Icahn Factor. Yahoo's annual meeting is Aug. 1, and Carl Icahn wants to replace Yahoo's board then with a slate of his own choosing.

Now, it's easy to underestimate the presence of Mr. Icahn in this particular corporate power play. In the context of Silicon Valley, Web 2.0, and the new new thing, he's a kind of ludicrous character: 72 years old, a reformed 1980s raider, working out of wood-panelled offices in midtown New York that look like a set from the movie Wall Street. He's not even on e-mail, for Pete's sake. His energy drink is a martini.

But what Mr. Icahn is, in the words of one CEO who has tangled with him is “a savant.” That is, he has a brilliant touch for ferreting out weakness in big corporate situations and capitalizing on that weakness to make smart, usually short-term investments through his trademark brand of trash-talking agitation and activism. (It's no fluke that Mr. Icahn is the richest man in New York City, a fortune built in part on his legendary raids of such companies as TWA, USX and Texaco.) An investor who has made money alongside Mr. Icahn described him to me in the midst of his assault on Time Warner a couple of years ago as “feral and autistic” – of course he is nothing of the sort, medically speaking, but it neatly encapsulated his great white shark-like single-mindedness. In the case of Yahoo, little heed has been paid to Mr. Icahn's attempt to replace the company's entire board of directors and bring in a new CEO who will, presumably, make sure the company does not get into bed with Google and instead turn around and sell the company to Microsoft. Mr. Icahn may not know anything about the Web or technology writ large, but he knows a thing or three about finance, the markets and capitalism. As far as he is concerned, Yahoo is mismanaging its shareholders' money by not taking Microsoft's lucre, which is the greatest sin in his playbook. In one of his missives to Yahoo chairman Roy Bostock, Mr. Icahn wrote last month that the company needs a new CEO to replace Mr. Yang, who took over after the exit of Terry Semel last year. “I ask again what your great ‘plan' has been over the last few years. Why did you permit Google to leave you in the dust?” Mr. Bostock and Yahoo have, of course, rejected Mr. Icahn and made the case for keeping the current slate of directors intact. Moreover, they have counterpunched Mr. Icahn's attacks for being “ill-defined” and based on “misrepresentations.”

This kind of back and forth, is, of course, business as usual for Mr. Icahn. And, indeed, even while investors appreciate his ability to crystallize their dissent, they don't necessarily want him running their company. Exhibit A in this regard has been Blockbuster Entertainment, a company in which Mr. Icahn won a proxy fight over in 2005, and put representatives on the board, but whose shares have traded at considerably less than what he bought them for.

In Yahoo's case, Mr. Icahn's threat could be much more credible if he were to change tack – which he may yet do – and propose to just put a few representatives on the Yahoo board, rather than replace the whole slate. One can only imagine how much Yahoo's current board would welcome him in the company's purple-hued meeting rooms, some of which are named after Ben & Jerry's ice cream flavours.

What is doubly intriguing about Mr. Icahn's involvement with Yahoo is that it has coincided with the debut of The Icahn Report, a much awaited blog by the man himself giving his forceful take on shareholder democracy. (It took so long for the Icahn Report to debut after it was announced in February, that the New York Post ran a counter on its website chronicling how long until the man would make his first post– 138 days it turned out.) Incidentally, one of Mr. Icahn's proposed board members is Mark Cuban, the Dallas Mavericks owner who notably became a billionaire by selling his startup to Yahoo years ago. And Mr. Cuban is one of the better-read business leader bloggers out there. Maybe Mr. Icahn is becoming more Web-savvy than we'd given him credit for. He wrote on his blog on June 27: “At this time, due to SEC regulations, I do not intend to post your comments regarding the proxy fight. However, I am planning to give you my views about Yahoo and its management shortly. If you wish to be informed I invite you to subscribe. Stay tuned.”

Richard Siklos is Editor at large at Fortune Magazine