Just minutes after Google (NASDAQ:GOOG) tacked on $17.78 a share -- or 4.7% -- on Thursday, the dot-com headline hog squandered most of those gains by announcing a secondary stock offering of 5.3 million shares.

Bad move.

Google had already diluted investors back in September with a secondary offering. It closed out the year with $8 billion in cash, so it's not as if it needs the money. And with the $1.6 billion in cash flow it generated last year, it wasn't going to have to tap into its balance-sheet greenery to keep itself going.

Acquisitions can be a drain on a company's finances, but Google has been pretty quiet on that front. Beyond closing on its $1 billion purchase of a 5% stake in Time Warner's (NYSE:TWX) AOL.com this week, Google hasn't been stuffing any pinatas with blank checks. If anything, it has been suspiciously quiet as what would have been logical purchases of MySpace, Ask.com, iVillage (NASDAQ:IVIL), and Skype have gone to other companies.

There are still a few big-ticket content sites out there worth owning -- like recent Rule Breakers recommendations The Knot (NASDAQ:KNOT) and CNET Networks (NASDAQ:CNET) -- but that doesn't seem to be where Google is heading.

Thanks to the Fed and Google's buoyant share price, the secondary offering is unlikely to be dilutive to earnings in the near term. In the fourth quarter, Google generated $70 million in net interest income on its $8 billion cash balance -- an annualized yield of 3.5% that is likely to inch even higher here in 2006.

Based on last night's close and analyst estimates that are calling for Google to earn $8.82 a share this year, Google's trading at 45 times this year's bottom-line forecast. The company would have to earn an annualized yield of 2.2% or better after taxes on its new capital to make the offering accretive in 2006, which is likely. Unfortunately, the secondary offering doesn't look so rosy the further you step out of 2006.

This can all change if Google is serious about putting its money to good use. If the secondary offering is successful, Google's cash balance will balloon to $9 billion after accounting for the $1 billion that went out to Time Warner. Let's just hope that Google isn't simply building up its cash arsenal to match Microsoft (NASDAQ:MSFT), because it will take several more secondary offerings for that to happen.

The one thing that truly bugs me about this offering -- beyond the timing -- is Google's ridiculous justification for the deal.

"This offering will partially meet the anticipated needs of index funds to purchase Google Class A common stock when Google is added to the S&P 500 Index at the close of trading on March 31, 2006," reads the press release.

Um, what happened to letting folks buy shares in the open market and allowing the interplay of supply and demand inch a stock's price higher? Wasn't that what drove the stock higher last week, when the company was officially invited to join the popular stock index?

Just know what you're doing, Google. This had better not be some ploy to squeeze an extra penny per share in interest income to satiate the analysts who were burned this past quarter. You'd better have a $9 billion plan. And I hope it's better than simply buying 1,500 bionic Steve Austins.

Microsoft is a Motley Fool Inside Value recommendation, and Time Warner is a Motley Fool Stock Advisor pick. Take any of our investing services for a free, 30-day trial.

Longtime Fool contributor Rick Munarriz is a huge fan of Google, and it would be his homepage if it weren't for Fool.com taking up that piece of real estate. He does not own shares in any of the companies in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.