In a nutshell (thanks to engine and nomis5), Eric Schmidt says that he is not aware of the specifics of the Microsoft-Yahoo deal. We know what he knows -- whatever the press people are telling us.
Additionally, Schmidt mentions the difficulty Google is facing when looking to monetize on social media. On the other hand, mobile growth looks promising. The scariest challenge for Schmidt in the future is language translation.
Finally, he says that there's dramatic market growth in the Japanese, Chinese, and European markets, and that Google is a very strong brand in Europe.
In other words, really good stuff. Sit down and give it a listen or read the 6-page interview that I found that nobody posted on WebmasterWorld. ;)