Updated from 5:09 p.m. EST

Google ( GOOG - Get Report) defied downward economic pressure and blew by analysts' targets on profits and sales in the fourth quarter.

The Net search giant posted a net income, excluding one-time items of $5.10 a share, up from $4.43 in the year-ago period and well above the $4.96 pro forma profit analysts had expected.

Sales for the quarter ended last month were $4.22 billion, up 24% over year-ago revenue of $3.39 billion. Analysts were looking for sales of $4.12 billion.

"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," CEO Eric Schmidt said in a press release.

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Unlike the pressures of the widening recession that flattened Microsoft ( MSFT - Get Report) and Nokia ( NOK - Get Report) Thursday, Google seems to have found enough levers to pull in the fourth quarter to avoid a big disappointment.

Google shares surged 8% to $314.78 in after-market trading Thursday but tapered off to 1% as investors digested the news.

One distraction was a contribution to revenue from the company's foreign currency hedging practices in the fourth quarter. The weak dollar took about $334 million off the revenue tally, but Google added $129 million to the top line thanks to advantageous foreign currency risk management moves.

Without the benefits of the currency hedging, Google's fourth quarter revenue growth would have been abut closer to analysts' consensus of about 2% sequential growth.

"It's unclear how long the global downturn will last, but our focus remains on the long term, and we'll continue to invest in Google's core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise."

Looking ahead at the current quarter ending in March, Wall Street has forecast nearly flat results, with pro forma profit of $4.98 on revenue of $4.12 billion, according to Yahoo Finance. Google typically does not provide detailed financial guidance.

Fans like Google's dominance in the search ad business, which has only widened in its lead over rivals like Yahoo! ( YHOO) and Microsoft. But Bears see a painful adjustment still coming.

To ease Google employees' discomfort of holding stock options that have a so-called under-water value, the company offered a voluntary one-for-one exchange of old options for new options. This swap offer would essentially re-price options to the current market value and not require new share issues that would dilute current shareholders.

On an earnings conference call, analysts asked Google executives if there were some cost cutting plans to consider if the revenue levels drop. The executives said on the call that they are "managing responsibly." "There's no doubt we are managing this business for the long term," the executives said. "The mindset of the company is that we are a growth company. We are focused on growing this company."