Microsoft has another reason to eat its liver.

Google did fine in the fourth quarter. It did better than fine. Like Apple and IBM, it beat estimates in a lousy environment.

According to CEO Eric Schmidt, "Search query growth was strong, revenues were up in most verticals, and we successfully contained costs."

He has no idea how long the downturn will last. Google doesn't give guidance.

It says it will continue to invest in its core search and advertising business and strategic growth areas like display, mobile and enterprise. It will also continue to make significant capital expenditures. Its two-fisted hiring however has tapered off. It only hired 99 people in Q4 making it 20,222 strong. It's canned 100 recruiters recently.

The company reported revenues of $5.7 billion, up 18% year-over-year and up 3% sequentially less $1.48 billion total TAC, or 27% of advertising revenues. Wall Street figured $4.12 billion.

It earned $382 million (GAAP), or $1.21, $1.62 billion (non-GAAP), or $5.10. Wall Street expected $4.95.

Google's net earnings were down 68% to $1.09 billion because of impairment charges related to AOL and Clearwire, but its operating earnings rose to $2.15 billion (non-GAAP).

With its stock half what it was a year ago Google said it's planning to offer employees who are underwater - roughly 85% of the staff reportedly has some shares underwater - a voluntary one-for-one stock option exchange as an incentive. The program will cost Google $460 million.

Google-owned sites generated revenues of $3.81 billion, or 67% of total revenues, a 22% increase. Google's partner sites generated revenues, through AdSense programs, of $1.69 billion, or 30% of total revenues, up 4%. Revenues from outside of the United States totaled $2.86 billion, representing 50% of total revenues, up 2%. Revenues from the UK totaled $685 million, 12% of revenue, down 2%.

Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of its AdSense partners, increased ~18%. Traffic Acquisition Costs (TAC), the revenues shared with Google's partners, was down $200 million.

It's got $15.85 billion in the bank.