Bill Miller, the powerful Legg Mason fund manager who at last count controled 5.4 percent of all Yahoo shares, just became a little less powerful. He's lost a client, Massachusett's $50.6 billion pension fund, which held a board meeting Wednesday and voted to transfer $1.4 billion of holdings managed by Legg Mason to rival State Street Global Advisors. Miller was a vocal advocate for a Yahoo-Microsoft merger — one that would have paid his clients a 62 percent premium on their Yahoo shares and maybe have kept their billions with Legg Mason. (Photo by AP/Pizac)

There will be no proxy fight at Yahoo's annual shareholder meeting this August 1. Today, Yahoo and corporate raider Carl Icahn agreed to end the fight by awarding Icahn three seats on an expanded, 11-member board. Icahn, who owns 5 percent of Yahoo, told the Wall Street Journal he still wants Yahoo to sell — either the whole company or just its search business at the right price — but that "I share the view that Yahoo's valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders."

Legg Mason portfolio manager Bill Miller controls 4.4 percent of all Yahoo shares and he's formally declared his plans to vote them for CEO Jerry Yang and the current Yahoo board. In a statement, Legg Mason says it doesn't buy corporate raider Carl Icahn's claim that Microsoft would only offer to buy the company again if it could negotiate with a new board.

Google cofounder Larry Page, Yahoo president Sue Decker, ex-Yahoo CEO Terry Semel, and Legg Mason fund manager Bill Miller, who owns large stakes in Google and Yahoo, sat and talked at a corner table at the Sun Valley Lodge, the site of Allen & Co.'s power media conference in Idaho. Page and Miller reportedly dominated the conversation. [DealBook]

$30 billion hedge fund Paulson & Co. has released filings to show it owns 3.4 percent of Yahoo shares and intends to support Carl Icahn's bid to replace the company's board. Combined with Icahn's 4.3 percent share, Legg Mason fund manager Bill Miller's 5 percent share and Capital Research fund manager Gordon Crawford's 6 percent share, at least 18 percent of Yahoo's ownership now favors displacing the company's board with directors more amenable to a Microsoft merger. Capital Research funds beyond Crawford's control own another 11 percent of the company, raising that total to at least 29 percent. Shareholder activist Eric Jackson says investors owning another 3.2 million Yahoo shares favor a Microsoft merger as well. CEO Jerry Yang and chairman Roy Bostock can write all the letters they want. There's only one holdup: Getting Microsoft back to the table. (Photo by Simon Grossi)

Sending angry letters, going public with a hostile offer — Microsoft CEO Steve Ballmer played rough with Yahoo CEO Jerry Yang and the Yahoo board during merger negotiations. Yahoo shareholders, dispirited by the failure of those negotiations, want corporate raider Carl Icahn to play rougher. Icahn purchased $1.3 billion worth of Yahoo only after large Yahoo shareholders contacted him and urged him to become involved, a source familiar with the matter told the Wall Street Journal. The man controlling the second largest portion of Yahoo shares, portfolio manager Bill Miller of Legg Mason, told the Journal he's glad Icahn joined the fray. "To the extent he can get the parties back to the table I'd be all in favor of that," Miller said. (Photo by AP/Mark Lennihan)

Yahoo will hold its annual shareholders' meeting on July 3. Investors angry over how Yahoo CEO Jerry Yang the Yahoo board handled merger negotiations with Microsoft — paging Gordon Crawford and Bill Miller — have until next Thursday to do so by submitting an alternate slate of directors to replace the current board. Wall Street analysts don't expect it to happen, reports the Financial Times. Activist shareholder Eric Jackson, the president of Ironfire Capital, isn't listening to them, however.

Yahoo chairman Roy Bostock told reporters that shareholders supported Jerry Yang's decision to refuse Microsoft's bid for the company, even when it reached $33 per share. But yesterday, major shareholders Bill Miller and Gordon Crawford — who combined control about 13 percent of the company — said they did not agree with the way Yang handled negotiations. In this excerpt from Yahoo's own Tech Ticker, Sarah Lacy asks Yahoo president Sue Decker, "Who are these institutional shareholders who are supporting $37, $38 per share? Can you shed any light on that?" Watch as Decker explains that what Bostock really meant is that Yahoo's board supports Yahoo's board, which only really ever told shareholders about Microsoft's $31 per share offer. "And that's the end of the story."

Yahoo has $2.3 billion in cash. Employees have told us they're begging management for some of that stash to buy more machines and hire more engineers. But Legg Mason fund manager Bill Miller — the guy who controls the second-largest collection of Yahoo shares around — told the New York Timesit's time for Yahoo to buy back some stock. "It would be almost incoherent not to do so," Miller said. "You can't maintain that $33 undervalues your company, have your stock trade below that, and not buy back stock." Yahoo shares fell 15 percent to $24.37 by market close today.

Yahoo CEO Jerry Yang refuses to negotiate with Microsoft, but Yahoo's largest shareholders aren't so coy. Take Legg Mason portfolio manager Bill Miller's posturing in today's Wall Street Journal, for example. Miller, responsible for the second largest stake in Yahoo, today called Microsoft CEO Steve Ballmer's weekend ultimatum to the Yahoo board a "blunder."

Word now comes that Liberty, former cable baron John Malone's company, has opportunistically paid $340 million for 14 million shares in Barry Diller's IAC, raising its stake to 30 percent. IAC, too, repurchased 6 million shares at the same time. That means that Diller must have begrudgingly consented to the sale; at the same time, he reached an agreement that prevented Malone from taking a bigger stake in the online conglomerate. But who was the seller?