You are twisting his words. Ballmer was not talking about Linux, but about the GPL and it's 'viral' nature.
No. You are totally incorrect. Here's the quote, from it source in the Chicago Sun-Times (via the internet archive):
Q: Do you view Linux and the open-source movement as a threat to Microsoft?
A: Yeah. It's good competition. It will force us to be innovative. It will force us to justify the prices and value that we deliver. And that's only healthy. The only thing we have a problem with is when the government funds open-source work. Government funding should be for work that is available to everybody. Open source is not available to commercial companies. The way the license is written, if you use any open-source software, you have to make the rest of your software open source. If the government wants to put something in the public domain, it should. Linux is not in the public domain. Linux is a cancer that attaches itself in an intellectual property sense to everything it touches. That's the way that the license works.