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Google Inc. reported a sharp decline in fourth quarter profits today because of bad investments while its core business showed resilience amid the slumping economy.

The Mountain View Internet giant said fourth-quarter profits fell 68 percent to $382 million ($1.21 per share), from $1.2 billion ($3.79) a year ago.

Much of the decline was attributed to a $1.09 billion charge for soured investments in wireless provider Clearwire and in the AOL Web portal. A settlement over copyright infringement with book publishers added $95 million in costs.

Google's fourth quarter revenue increased 18 percent to $5.7 billion, up from $4.83 billion for the equivalent period in 2007.

"Google performed well in the fourth quarter, despite an increasingly difficult economic environment. Search query growth was strong, revenues were up in most verticals, and we successfully contained costs," Eric Schmidt, Google's chief executive, said in a statement.

Excluding certain expenses, Google would have earned $5.10 per share, exceeding the average analyst estimate of $4.97 per share.

Google executives have cast their company as being more resistant to the recession than many other companies. Marketers are less likely to cut their spending on search advertising - Google's main business - because it is more targeted and its success more easily measured than other forms of advertising.

Still, Google has trimmed some expenses in recent months including laying off 100 recruiters earlier this month after cutting a significant number of contractors. Several products that failed to catch on, such as a program to sell print newspaper advertising, were either jettisoned or left in limbo without further development.

Overall sales by the search advertising industry shrank 8 percent in the fourth quarter, according to search marketing firm Efficient Frontier, the first decline since the company started tracking spending several years ago. Finances and automotive advertising is especially weak.

Google's shares rose $5.71, or 1.9 percent in after-hours trading today to $312.21.