(FORTUNE Magazine) – It is a recent Monday morning in midtown Manhattan, and Al Dunlap is taking the stage before 200 Wall Street analysts and major investors to do something he has never done--explain why his stock, under his watch, has lost half its value in two months. "What went wrong is fixable. The new Sunbeam is dynamic and efficient," he enthuses. "This is the nucleus of a fantastic company going forward." But the numbers the CEO reveals tell a different story, and inevitably, one of the sharks in the audience surfaces: "Al, are you willing to give back your bonus and work for a dollar this year?"

"No, Andrew Shore, I'm not," Dunlap snaps at the Paine Webber analyst. Shore is one of Dunlap's many problems these days, and as the meeting ends, the analyst leans forward to the man sitting in front of him, Michael Price, the powerful mutual fund manager who is Sunbeam's largest shareholder. "You oughta fire Dunlap," Shore tells him. Dunlap is out of earshot, which may explain why he is relatively polite when he later corners Shore and says, "You son of a bitch. If you want to come after me, I'll come back at you twice as hard."

Such is life at the top of the food chain. And for once-invincible "Chainsaw" Al Dunlap, remorseless cost cutter and bottom-line man, the food chain is a scary place these days. After the meeting (where he announced 5,100 layoffs), Dunlap sits down in his hotel suite for an exclusive interview with FORTUNE. When he flicks on the TV to see how his act went over, Sunbeam's stock is down almost two points in a buoyant market. "That's okay," he says. "It'll come back."

So far, it hasn't. In fact, it's hovering around $25, off more than 50% from its high in March. That's enough to keep a guy looking over his shoulder--even a guy who walked into Sunbeam in the summer of 1996 with the stock at $12.50 and, trading on the glory of his previous turnarounds (notably at Scott Paper), sent the share price surging 49% in one day. Dunlap, now 60, had grand hopes for Sunbeam--it was to be his last big turnaround, he said. And for a time, by firing half the work force and posting big profits, he delivered. But what's happened since is a study in management hubris and the perils of fixating on stock price to the exclusion of all else. Dunlap may be a pro at fixing companies, but running them long term is another story--and now his reputation isn't the only thing in jeopardy.

Ironically, it may be Dunlap's mania for maximizing shareholder value (long the key to his success) that finally does him in. By last fall, with his cost cutting at Sunbeam done and the stock approaching $50, Wall Street was begging him for a big acquisition to sustain Sunbeam's growth. Dunlap promised a megadeal, but he couldn't pull the trigger; he kept holding out for a last surge in his shares, or a sweeter offer. In November, when Philips, the Dutch electronics giant, apparently was interested in buying Sunbeam for more than $50 a share, Dunlap held out for at least $70. Philips walked.

Likewise, a deal with Black & Decker--a fine match as far as Wall Street was concerned--never stood a chance. "They were afraid of us," boasts Dunlap, who takes pride in spooking his rivals. Then, in December, Dunlap, Michael Price, and billionaire financier Ronald Perelman met at Perelman's home in Palm Beach, Fla., to talk about Sunbeam's buying Coleman, the camping-gear maker. Dunlap offered $20 a share; Perelman, who owned 82% of Coleman, wanted $30. Egos erupted. Dunlap stormed out of Perelman's house yelling, "Fuck you! And fuck your company!"

"I just watched," recalls Price with a smile. "You know, deals are funny. It's like dating. You never know when you're going to hit it off." Three months later, Sunbeam agreed to buy Coleman--at Perelman's price of $30 a Coleman share. Dunlap also picked up two smaller acquisitions: First Alert smoke alarms and Signature Brands (Mr. Coffee). "A triple!" he crowed. Sunbeam stock shot up to $53.

It was all downhill from there, as a series of nasty surprises greeted investors. It seems Dunlap had been so desperate to keep his share price aloft--partly to help pay for his acquisitions--that he used sales and accounting gimmicks to puff up last year's results. One technique was a "bill and hold" program in which Sunbeam recorded "sales" for grills that for months were neither paid for nor shipped to customers. Inevitably, grill sales (which account for one-third of Sunbeam's total revenues) tanked early this year, leading to an unexpected first-quarter loss.

It was Paine Webber's Shore ("He's like a peanut at a gourmet dinner," gripes Dunlap) who first downgraded Sunbeam's stock from a buy in April. Other analysts followed. "We had a bad quarter. Big deal," Dunlap says, swearing he didn't mean to blind-side investors. He blames the results on an executive he's since fired (Don Uzzi, his No. 3) and, of course, on El Nino: "I hate excuses, but it's a reality. People don't think about buying grills during a storm."

Now the CEO's fate rests with his "bosses," Sunbeam's two largest shareholders. Perelman acquired 13% of Sunbeam in the Coleman deal last March; the value of his stock has since dropped more than 40%. He declined to talk to FORTUNE, but people close to him say he's very angry. As for Price, he already had a hand in firing three Sunbeam CEOs before bringing in Dunlap. "Look, this is an interesting stock at $25," Price says. "It's down in an up market. The company's got a great mix of products. It has two guys who control 30% of the shares. And we're not going to sit around and let Al wreck the company. We're paying a lot of attention."

Which goes a long way toward explaining why, in April, Sunbeam hired headhunters to find Dunlap's successor. "It was my decision," the CEO insists, but Price clearly prodded him. The search is on for a growth-minded recruit from a solid company like Hewlett-Packard or General Electric. It won't be easy finding someone who will work with "Rambo in pinstripes." But the lure is the likelihood that Dunlap will step down next year. "If things go well, he'll stay longer," Price says.

If they don't, Dunlap won't exit quietly. He says he's staying on as CEO for three more years: "Am I afraid of losing my job? Get goddamn serious!"