When outsiders pump and dump a stock, shareholders scream bloody murder. But when a money-incinerating company like FuelCell (NASDAQ:FCEL) bloats itself up via PR, then floods the market with a follow-on share offering, somehow, that counts as smart management?

Might be smart for the company, but it's murder for shareholders. But then, I've been telling investors to avoid this cash-burner for years.

FuelCell today announced a 9-million-share offering -- equivalent to a whopping 17% of the current share count. It follows last week's breathless PR about Connecticut power deals that (if you read beyond the headline) are anything but certain.

No matter! The stock popped 20% on the speculation, and it looks like FuelCell is cashing in. In the Connecticut power PR, CEO Daniel Brdar (who has such great faith in the company that he owns only what he gets via company handouts) claims that the additional potential revenue would help the company improve margins. I doubt that would matter much. Take a look at this chart, paying special attention to gross margins.

FY 2003

FY 2004

FY 2005

FY 2006

TTM

Gross Margin

(155.2%)

(114.3%)

(111.6%)

(111.4%)

(114.5%)

Operating Margin

(217.7%)

(246.7%)

(230.1%)

(241.7%)

(245.1%)

Net Margin

(199.5%)

(281.2%)

(240.4%)

(253%)

(256.3%)

Shares

39.3

47.9

48.3

51.1

61.2*
*In millions. Data from Capital IQ, a division of Standard and Poor's. TTM 2007 share count adjusted to account for placement announcement and is otherwise based on 1/31/2007 data. Each fiscal year ends on 10/31.

Now take a peek at the bottom row to see how greatly shareholders have been diluted. FuelCell's been staking a claim to the future of energy for years now, but it's been dead money for the past five years. Given the terrible operating results and shabby treatment shareholders have gotten over the years, as emphasized by the past week's shenanigans, I expect FuelCell to remain a bagholder special for a long time in the future.

Comments? Bring them here.

At the time of publication, Seth Jayson had no positions in any company mentioned here. See his latest blog commentary here. View his stock holdings and Fool profile here. The Motley Fool has a disclosure policy.