What happened

Icahn Enterprises (IEP -0.12%) reported disappointing earnings and slashed its dividend as the fallout continues from a short-seller attack earlier this year. Investors are running for the exits, sending shares of Icahn Enterprises down as much as 37% at the open Friday.

So what

Famed activist investor Carl Icahn is usually the one pushing for change at a company, but a May Hindenburg Research report critical of Icahn Enterprises has had real ramifications for the stock. Hindenburg, a prominent short-seller, called Icahn Enterprises "substantially overvalued" and accused the company of relying on a "Ponzi-like" structure to fund its dividend.

On Friday morning, Icahn Enterprises reported a second-quarter loss of $0.72 per share on sales of $2.68 billion, down from a loss of $0.41 per share on revenue of $3.8 billion a year ago. The company also declared a dividend of $1 per share, down from the previous $2-per-share payout.

Icahn in a statement blamed Hindenburg for some of the company's woes.

"I believe the second quarter partially reflected the impact of short selling on companies we control or invest in, which I attribute to the misleading and self-serving Hindenburg report concerning our company," Icahn said. "It also reflected the size of the hedge book relative to our activist strategy."

Now what

Icahn might not be pleased with what Hindenburg said, but his company was clearly affected by it. Last month, Icahn restructured his debt in an effort to cut loans tied to the trading price of Icahn Enterprise shares, a response to Hindenburg criticism over the number of shares Icahn has pledged as collateral for loans.

The dividend cut addresses another Hindenburg complaint.

Icahn is planning on returning the company to its activism roots, and said, "We believe strongly that our current portfolio will yield additional winners and generate significant upside ahead."

But Hindenburg is not backing down. On Friday, the firm noted the changes at Icahn Enterprises on Twitter, but said, "We remain short."

One of the most intriguing battles in corporate activism is not over yet.