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Ballmer talks acquisition strategy

Candid about Microsoft's expansion plans, the CEO was cautious when discussing the Facebook partnership and competing with Google search.

What could be more Web 2.0-ish than Steve Ballmer making a public pitch to would-be deal makers to pick up the phone?

Speaking at the Web 2.0 Summit in San Francisco on Thursday, Microsoft's CEO said his company was on the prowl for acquisitions that made strategic sense.

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

Sitting in front of a standing-room-only audience jammed into the main ballroom at the Palace Hotel, Ballmer also said Microsoft may also include open-source software makers on its shopping list.

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

While Ballmer was surprisingly frank about Microsoft's expansion plans, he carefully juked his way past a question put to him from conference co-host John Battelle about his company's relationship with Facebook. Last year, Microsoft landed a deal to provide Facebook with search and advertising listings. When Battelle asked "how the financing's going," Ballmer smiled but demurred.

"As Mark (Zuckerberg) said, it's going pretty well, so I guess that's the answer," Ballmer said. "We've got a great partnership with Facebook on the advertising side...we'll see where it takes us."

As the proverbial 800-pound gorilla of the software business, Microsoft is increasingly under fire from old and nascent competitors. The company also remains several steps behind Google in the search business, a predicament that Ballmer suggested is being addressed--albeit with mixed results.

"I'd probably tell you I'm happy with everything and I'd probably tell you everything needs a lot of improvement," he said. "In every area there's a lot of good and in every area there's a lot of room for improvement."

Asked whether Google was a "one-trick pony," Ballmer shifted the focus of the question.

"One of the things that's true about most technology companies is they start in an area, get really good in that area and fill out that core," he said. "We're trying to be a three- and four-trick pony."

The conference, which began on Wednesday and runs through the rest of this week, has become a schmooze-fest where myriad entrepreneurs and investors can swap ideas about the next direction of the Internet business.