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."
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV