Big Legg Mason fund may support Yahoo! independence

The elbows are getting sharp in the corners and soon the battle lines over the Microsoft (NASDAQ: MSFT) fight for Yahoo! (NASDAQ: YHOO) will become more evident to the public. Legg Mason's big equity fund, lead by disgraced stock guru Bill Miller, is prepared to support an effort by Yahoo! to remain independent, should Microsoft lower its offer, according to The Wall Street Journal.

Miller's performance has been so hideous over the last year that he should keep his opinions to himself.

What Miller is not acknowledging is that Microsoft may simply walk away if it cannot get the support of Yahoo!'s shareholders and board. The portal's stock was below $20 and many predict it could go back there if Microsoft withdraws its offer. The eventual price depends on Yahoo!'s first quarter performance, but at this point, Redmond thinks it has the best deal -- perhaps the only deal -- in town.

The conventional wisdom is that if Microsoft goes away, it may take years for Yahoo! to get its price back above $30, if it gets there at all. Yahoo! may be underestimating how bad the current recession could get. If so, it may look back at the current offer and rue the day that it decided to fight a takeover.

At the very least, with Miller's track record, he is hardly a bell-weather for what Yahoo! should do.

Douglas A. McIntyre is an editor at 247wallst.com.