Google on Thursday reported strong fourth quarter revenue and earnings, while the company said it would like to continue doing business in China, a week after it announcing it may leave the country because of cyber attacks.

The leading search engine company said its revenue rose 17% in the fourth quarter to $6.67 billion from a year earlier, up from 7% growth in the third quarter and 3% growth in the second quarter. Earnings more than quintupled in the fourth quarter to $1.97 billion, or $6.13 a share, from $382 million, or $1.21 a share, a year ago. During the 2008 quarter, Google had taken a charge related to investments in web company AOL and wireless service provider Clearwire.

Google said it benefited from marketers continuing to shift spending online during the strong online Christmas shopping season. Google's shares fell in after-hours trading to $558 each, down 4.3% from their 4 p.m. close.

"Google had a strong fourth quarter, with 17% year over year revenue growth," said Eric Schmidt, CEO of Google. "Given that the global economy is still in the early days of recovery, this was an extraordinary end to the year. Our performance in 2009 underscored the strength of our management team, the resilience of our business model and the pace of innovation within our product and engineering teams, which continued unabated throughout the downturn. As we enter 2010, we remain hugely optimistic about the internet and are continuing to invest heavily in technological innovation for the benefit not only of our users and customers, but also the wider web."

On a conference call with analysts, Schmidt said the company wants to continue doing business in China, one of the world's biggest markets, even though it will stop censoring its results.

He said Google will change its censoring policy "a reasonably short time from now" but remains"quite committed to being in China."

He added that "we like the Chinese people and our Chinese employees. We like the business opportunities there and we'd like to do that on somewhat different terms than we have."

Schmidt in an interview added that he was under no illusion that Google’s stand against censorship would help to promote free speech in China in the short term, but he said Google’s voice could be one of many that influence the country over time. “Obviously, we hope that the censorship will be ended by China at some point,” he said.“It does not follow that we think they are going to do that next week.”

Arch rival, Microsoft CEO Steve Ballmer said his company will comply with Chinese censorship laws as well as the laws and customs of any country where it does business.

"I think you have to respect sovereign nations to make that decision," Ballmer said in Houston at an oil and gas industry conference.

He added that Microsoft would let people know it removed information from its Bing search engine But he said"it's important we comply with the laws and conventions in the countries [where] we do business."

He said other countries exert some sort of control over information; in France, it is illegal to trade Nazi paraphernalia, and the US has strict curbs on child pornography.

Google executives are reported to have had meetings with Chinese government agencies that are investigating the security and potential political implications of the cyber attacks.

Google said last week it may pull out of China following an attack on its network. But its CEO Eric Schmidt says it would like to remain in China and is currently in talks with Chinese authorities about making some changes. Cheng Lei takes a look at the reaction on the mainland:

Last week, Eric Schmidt had a meeting with White House National Security Council staff, to discuss the issue.

Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $1.72 billion in the fourth quarter of 2009, compared to TAC of $1.48 billion in the fourth quarter of 2008. TAC as a percentage of advertising revenues was 27% in the fourth quarter of 2009, compared to 27% in the fourth quarter of 2008.

The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.47 billion in the fourth quarter of 2009. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $250 million in the fourth quarter of 2009.

As of December 31, 2009, cash, cash equivalents, and short-term marketable securities were $24.5 billion.

On a worldwide basis, Google employed 19,835 full-time employees as of December 31, 2009, up from 19,665 full-time employees as of September 30, 2009.

Results detail

Instant reaction to Google's Q4 earnings, with David Garrity, GVA Research and CNBC's Jim Goldman.