News Corp. boss Rupert Murdoch said he wouldn't team up with Microsoft to pursue Yahoo, nor would he do a deal with Yahoo and spite Microsoft. But that hasn't stopped rumors from flying that Yahoo could be keen to renew talks with News Corp.

However, News Corp. may not be the only potential matchup for Yahoo, which is said to be pursuing its own strategy for independent growth. Yahoo and Microsoft continue to talk separately to Time Warner executives about a deal for AOL. But it seems clear that neither company sees AOL as its first choice.

Meanwhile, Yahoo's bid to continue independently got a major shot in the arm today with news that Legg Mason Capital Management, which owns about 4.4 percent of the company, said that it would prefer that Yahoo's board reach an amicable settlement with Carl Icahn, who is in the midst of a proxy fight for control of the slumping internet giant.

Legg Mason also called for Icahn to "end this disruptive proxy contest."

While Icahn and Yahoo are slated for an Aug. 1 showdown at the company's annual shareholder meeting, the statement could signal a turning point for what has become a much maligned and beleaguered board.

In the meantime, the war of words continues between Yahoo and Icahn. Yesterday, Yahoo Chairman Roy Bostock and CEO Jerry Yang issued a letter calling Icahn a "corporate agitator."