March 29 (Bloomberg) -- Google Inc., the most-used Internet search engine, plans to sell 5.3 million more shares to satisfy demand for the stock as the company joins the Standard & Poor's 500 Index.

The sale would raise more than $2 billion at today's price and would bring to more than $6 billion the total Google has raised from stock sales in the past year. The new shares primarily will be offered to funds that are based on the S&P 500, Google said today in a regulatory filing.

Google is expanding into radio and print advertising, and the sale lets the company capitalize on a stock price that has more than quadrupled since the August 2004 initial public offering. S&P 500 fund managers will have to buy $7.3 billion of Mountain View, California-based Google's stock because of its inclusion in the index, according to an estimate last week from Citigroup Inc.

``It's a perfectly rational move and an opportunistic move given the recent share-price gain,'' said Philip Remek, an analyst at Guzman & Co. in Miami. ``It's great to be able to snap your fingers and pick up $2 billion.''

The stock fell $11.53, or 2.9 percent, to $383.45 in extended trading after the announcement. Google shares, sold at $85 apiece in the initial public offering, had gained $17.78 to $394.98 at 4 p.m. in Nasdaq Stock Market composite trading and have more than doubled in the past year.

Highest-Priced

Google replaces Burlington Resources Inc., an oil company being acquired by ConocoPhillips, after the close of trading on March 31. The stock will become the highest-priced member of the index, surpassing Goldman Sachs Group Inc. Funds with more than $4 trillion track the S&P 500, including about $1.1 trillion in index funds, according to S&P.

Goldman, Sachs & Co. will manage Google's share sale.

The search engine today said it will use the proceeds of the sale for capital expenditures, possible acquisitions and general corporate purposes. The company had $8.03 billion in cash at the end of the fourth quarter.

``Securities laws prevent us from commenting further so please refer to our filing,'' Google spokeswoman Lynn Fox said.

Google raised $4.18 billion in a follow-on stock sale in September. The company sold 14.2 million shares at $295 each in an offering that was more than double the size of the IPO.

Acquisitions

``I am surprised, given that they just recently completed a follow-on offering,'' said Pacific Crest Securities analyst Steve Weinstein in Portland, Oregon. He rates Google ``outperform'' and said he doesn't own shares. ``I'm not sure what they would be doing that they would need an additional $2 billion.''

Google is investing more to maintain the advertising sales growth that propelled the stock to a high of $475.11 in January. The company spent $838 million on capital projects last year and in January bought dMarc Broadcasting Inc., a company that places ads on the radio, for as much as $1.24 billion.

This month, Google bought @Last Software Inc., a maker of 3D design software, to improve its satellite mapping program. The company also purchased Silicon Valley start-up Upstartle, which makes a word processor for the Web.

``Search is a rapidly evolving area, and in the newest areas a lot of the best technologies are in various startups,'' said Guzman's Remek, who rates the shares ``underperform'' and doesn't own them.

Mounting Competition

Google faces mounting competition from Sunnyvale, California-based Yahoo! Inc. and Redmond, Washington-based Microsoft Corp., the search engine's two closest competitors.

Yahoo and Microsoft are seeking to capture a larger share of Internet search, a market Merrill Lynch & Co. estimates will grow 32 percent to $6.91 billion this year in the U.S. Microsoft is testing its adCenter program and expects the product to be running by June 30. Yahoo is improving its search engine to wring more revenue from each search.

Google in December beat out Microsoft for an advertising agreement with Time Warner Inc.'s America Online. Google said today that it signed a final agreement to buy a 5 percent stake of AOL for $1 billion. Microsoft had $34.7 billion in cash and short-term investments at the end of 2005.

``More cash is always better than less,'' Remek said. ``A billion dollars just came in handy.''

To contact the reporter on this story: Jonathan Thaw in San Francisco at jthaw@bloomberg.net.

Last Updated: March 29, 2006 19:21 EST