Jan. 29 (Bloomberg) -- Yahoo! Inc. Chief Executive Officer Jerry Yang's plan to boost sales by offering services for phones and social-networking sites may founder from a lack of money.

The owner of the most visited U.S. Web site is forecast by analysts to report an eighth straight quarter of declining profit today. The Sunnyvale, California-based company is generating 49 cents a share of non-budgeted cash, compared with $5.57 for Google Inc., the world's largest Internet search engine.

Yahoo's investments in online advertising, which accounts for most of the $6.5 billion in annual sales, have failed to stem market share losses to Google.Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York, said Yang's financing options for acquisitions and technology spending are limited, giving Google an edge as the companies move into mobile-phone advertising, social networking and Web video.

``It's putting Yahoo at greater risk of irrelevance,'' Lindsay said. He recommends adding Google shares and holding onto Yahoo's stock. Yahoo ``just isn't generating anything like the resources they need to really stay in the game,'' Lindsay said.

Fourth-quarter net income at Yahoo probably fell 42 percent to $155.8 million, or 11 cents a share, according to the average of 22 analysts' estimates in a Bloomberg survey. The company, which reports results today after markets close, may announce about 700 job cuts, 5 percent of the staff, a person with knowledge of the plans said last week.

Google will probably post a 21 percent increase in profit to $1.25 billion, or $3.90 a share, when it reports results Jan. 31, the survey showed.

Yang's Strategy

Yahoo spokeswoman Diana Wong declined to comment. Google spokesman Jon Murchinson said his company would ``continue to invest in search and ads,'' without commenting on the quarter's results.

Yahoo is struggling relative to Google because of a failure to invest in ``cutting-edge'' technologies in past years, said Robert Peck, an analyst at Bear Stearns Cos. in New York, who advises buying shares of both companies.

Yang, who replaced Terry Semel as CEO in June, also faces challenges to win sales from social-networking sites Facebook Inc. and News Corp.'s MySpace.

While Yahoo made acquisitions to build its so-called display business -- including paying $680 million to buy the remaining stake in Right Media Inc. and $300 million for BlueLithium Inc. - - Google has sought bigger deals. Mountain View, California-based Google paid $1.65 billion for video site YouTube Inc. and is buying the online advertising firm DoubleClick Inc. for $3.1 billion.

Richer, Poorer

Google had $13.1 billion in cash, cash equivalents and marketable securities at the end of September, compared with $2.8 billion for Yahoo. Google had $1.63 billion in cash flow from operations in the third quarter, versus Yahoo's $457 million.

``With Google having such a size advantage and good business going, they've got the money to spin off to do other things,'' said Larry Valencia, who helps manage about $11 billion at UMB Asset Management in Kansas City, Missouri, including shares of Google. ``That puts that much more pressure on Yahoo.''

Yahoo, which had dropped 26 percent in the past year before today, rose 2 cents to $20.80 at 9:31 a.m. New York time in Nasdaq Stock Market trading. Google, up 12 percent in the past 12 months, advanced $3.40 to $559.38.

Yahoo's Upgrade

Yahoo upgraded its search service in October to include links to songs, videos and photos, the biggest changes since 2004. Google's share of U.S. searches climbed to 56 percent in December from 54 percent three months earlier, according to New York-based Nielsen Online. Yahoo fell to 18 percent from 20 percent.

Searches will account for 37 percent of the $27.5 billion U.S. online advertising market in 2008, estimates research firm EMarketer Inc.

Yang, who started Yahoo with David Filo in 1995, unveiled a new mobile-phone home page this month at the Consumer Electronics Show in Las Vegas. He said Yahoo will offer software to help outside developers build applications for handsets and presented an upgraded e-mail program that will allow users to add such things as photos and maps.

``The future is about making the Web experience simpler and more efficient,'' Yang told the audience.

In November, Yahoo introduced a Web site called Kickstart that helps graduating college students get career advice from their schools' alumni.

Ad Sales

U.S. advertising on mobile phones and social networks may total $3.2 billion in 2008, increasing to $7.5 billion in 2011, New York-based EMarketer said. That's revenue Yahoo will share with Google, Microsoft Corp., News Corp., Time Warner Inc. and Facebook.

While Google's sales in mobile phones, social networking and YouTube ads may be minimal in 2008, the company's lead in search will lift revenue by 45 percent in 2008, almost triple the growth at Yahoo, predicts JPMorgan Chase & Co. analyst Imran Khan in New York.

To contact the reporter on this story: Ari Levy in New York at alevy5@bloomberg.net

Last Updated: January 29, 2008 09:35 EST