Bad mouthing a market you're about to buy into isn't so dumb. If he were super enthusiastic about Facebook in the first discussion, Microsoft might have had to pay more to get the deal.
"It's just a fad" == "I can walk away from this deal" -- one of the best negotiating positions possible.
The funny thing is that, for once, most people probably agree with Balmer's original statement.
I don't see how Facebook could not be a fad. Unlike Google or even Microsoft, they aren't solving any real technology problems. They are providing a service that is essentially a limited version of the internet at large. I'm not saying they won't be around at all in five years. Just that the noobs will eventually tire of poking each other and paying to send each other icons.
Maybe Steve and Mark are both Harvard drop-outs, and the Google founders aren't? Steve lost one hacker (in Bill leaving the company) so now he's going for the next-in-kin?
"It's just a fad" == "I can walk away from this deal" -- one of the best negotiating positions possible.