Forget Apple -- It's Google's Turn Now

BOSTON (TheStreet) -- In a tech world fixated on everything that Apple(AAPL) does, it's easy to forget that Google(GOOG) is still in business -- and reporting quarterly earnings today.

Apple hogged the media spotlight this week, first on word that CEO Steve Jobs would take another health-related leave of absence and then on a blowout earnings report.

Google, on the other hand, hasn't been in the headlines, aside from its struggle with China over censorship and for its mishandled introduction of the Google TV set-top box.

The key question for investors ahead of Google's fourth-quarter earnings results, due for release at the close of trading Thursday, centers on a big salary increase for workers. In November, Google took steps to retain employees by awarding $1,000 tax-free cash bonuses for the holidays as well as 10% salary increases across the board, effective Jan. 1.

Google rewarded its employees richly in the fourth quarter, but what about the Internet search giant's shareholders?

For investors concerned about the spending habits of Google, the reports of salary increases appeared to be more bad news. Google devoted $1.47 billion toward capital expenditures in the first nine months of 2010 -- $757 million in the third quarter alone. The fear is that Google's commitment to its employees and the costs of funding its projects will lead to less revenue trickling down to the company's bottom line.

Philip Tasho, co-founder and chief investment officer of TAMRO Capital Partners, and Jerome Dodson, manager of the Parnassus Workplace Fund(PARWX), are less worried than most investors about Google's spending habits.

Tasho, who runs an Alexandria, Va.-based firm with $1.4 billion in assets, says Google demonstrated that, while the company did spend more money to retain key employees in the third quarter, the company delivered big profits.

"They realize it's a balancing act and that they need to invest in their own people to be as good as they are, but they also have to deliver for shareholders, too," Tasho says. "The lag in the stock price probably gave Google more of an impetus to put in more financial controls. They need to invest in the future, which is their employees, so I don't view it necessarily as a negative."