Here's the quote:

"Absolutely not," says Ballmer. "Absolutely not. I would say 'Hey, you're just 3 years old and we've got you in there playing basketball with the 12-year-olds. You're growing up quick, you're getting better every day, EVERY DAY! And hey, you might not be able to dunk now, but when you're 6 or 7 or 8, you're going to dunk, and YOU'RE GOING TO DUNK ON THE OTHER GUY!' That's what I'd say."

(Note: This comment is being interpreted in some coverage as Ballmer referring Google as a 3-year-old, but I'm told by a person who was there that he was, in fact, making a reference to Microsoft's own Live Search team, not zinging Google at that particular moment.)

"Microsoft will continue to invest in buying technology, products and market share," he said, according to CNet News.com. "We'll buy 20 companies a year consistently for the next five years for anywhere between 50 million and 1 billion bucks."

Ballmer added: "We will buy smaller companies that make some use of open source software. ... We don't want to discourage people who would talk with us just because they do some open source."

On All Things Digital, Paczkowski reports that Ballmer invited people in the crowd to e-mail him if they had a deal to consider. (That might sound crazy, but Ballmer actually does that a lot, announcing his e-mail address on stage and inviting people to contact him for various reasons.)

Regarding acquiring Yahoo ... to gain more traction with advertising and Web share, he said, "We believe in our independent path." He didn't exactly rule out a union but it sounded like the two companies are pursuing their separate paths for now.

... Battelle asked Ballmer about making a substantial investment in Facebook. "We have a great ad partnership. We'll see where it takes us," Ballmer said. As expected both Facebook's CEO Mark Zuckerberg and Ballmer are dodging the question.