Google made $382 million for its fourth quarter of 2008, in a large drop-off from $1.29 billion in the third quarter and $1.21 billion a year ago.

The search engine’s revenue was $5.7 billion, up 3% from the third quarter and up 18% compared to last year.

CEO Eric Schmidt said the results aren’t all bad. “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,” he said. “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.”

Google cited the declining value of its 5% investment in AOL, along with a $500 million investment in Clearwire, as reasons for its shortfall.

Senior Vice President Jonathan Rosenberg defended Google’s wireless business. “We think the Android numbers will start to speak for themselves, particularly this year, now that we’ve got some additional partners signed up to get to the next generation from a hardware perspective on the platform. So we are very optimistic about Android,” he said.

“…We’re really seeing significant increases in the sales of the smarter phones, both the iPhone, which we mentioned, but also Android. With those kind of phones, it’s going to significantly grow the pie for mobile searches, and these smartphones have full browsers. When you have a full browser, then you are typically not as dependent on a deal that locks somebody into a particular direction from a search perspective. So, the better browsers get, the better phones get, and the better ecosystem that evolves there, the better from our perspective,” Rosenberg noted.