Icahn Roars Again

Time Warner missteps have cost holders $40 billion, he claims.
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Updated from 3:49 p.m. EST

Carl Icahn resumed yelling at

Time Warner

(TWX)

Tuesday, unleashing a 350-page report calling for a four-way breakup of the media giant and other measures to boost the stock price.

The report, prepared by Bruce Wasserstein of the investment banking juggernaut

Lazard

, reiterates Icahn's earlier calls for a bigger stock buyback at Time Warner and steep cost cuts at corporate headquarters. Under Icahn's restructuring, Time Warner would spin off its America Online, Publishing and Time Warner Cable units to shareholders.

The unveiling of the huge report came at New York's St. Regis Hotel. Icahn, who owns 3.5% of Time Warner, said the company is ripe for dismantling based on current valuations of its individual parts.

Icahn and Wasserstein claim in an accompanying press release that Time Warner "has been managed for the short-term and that the board's decisions have cost shareholders at least $40 billion in value." Icahn announces in the release that Time Warner managers have failed to "nurture or invest in AOL," to everyone's great dismay.

At the St. Regis, Icahn stayed on form, comparing CEO Dick Parsons' embrace of Time Warner's conglomerate structure to the Alec Guinness character in

Bridge on the River Kwai

. Time Warner's Columbus Circle headquarters, Icahn added to some laughter, is Parsons' bridge.

Closer to the point, Icahn sidekick and former

Viacom

(VIA) - Get Report

chief Frank Biondi was asked to comment on remarks this week by Rupert Murdoch. Murdoch, the

News Corp.

(NWS) - Get Report

chief, questioned in a

Newsweek

interview whether a split-up would let Time Warner units compete globally.

"All the Time Warner companies have enough scale to compete on a global level," Biondi replied. "Warner Brothers gets half its revenue from overseas," he added, saying that Warner Brothers' strength is all the more reason Time Warner should have thrown its energy into an acquisition of MGM.

Harold Vogel, Vogel Capital Management, believes the Wasserstein presentation gave Icahn's group "more traction." But Vogel still has a lot of questions about the group's savings estimates.

"Time has not been friendly to Time Warner, and the need to implement change is urgent," Wasserstein's press release concludes.

Time Warner fired back after the close. "Our board and management regularly review all of the strategic options for managing this company to create the greatest value for our shareholders. We are on the right path," the company said in a postclose press release. "The company is delivering. Nevertheless, we will study the Icahn/Lazard proposal carefully and thoroughly, as is consistent with our existing practice and with our fiduciary duty to shareholders. We will have more to say on the specifics of the proposal in due course."

Icahn began building a Time Warner stake and complaining about the company's stock-price underperformance last year. Despite his aggressive efforts to push management to make changes and his public relations visibility, Icahn has failed to move the stock out of the high teens it has inhabited for some time. In Tuesday's report, Wasserstein says the stock could fetch $23-$26 or so after all the spinoffs and buybacks he recommends.

Wasserstein put up a Web site,

EnhanceTimeWarner.com, to publicize his report. "Joining Mr. Wasserstein will be Frank Biondi and Carl Icahn" in a discussion of the "comprehensive analysis," the site says.

Time Warner matched that too. "As always, we will keep you informed of our progress," Parsons says in an attached letter to shareholders. "For more information and updates, please go to the new "Building Value" area on our Web site:

timewarner.com/buildingvalue.

Late Tuesday, Time Warner shares dropped a dime to $18.47.