thanks for the well thought out responses. here is my recap take.
1) all things being considered; having a subdomain will NOT hurt your
ranking
2) a subdomain may delay the ranking; as would a new domain - therefore
a directory
may get that page ranked quicker
Therefor; use subdomains if it enhances your site - not for any pure
SEO play.
My original intent on this question was whether there was any penalty
for using a subdomain - and again, asnoted above - all things being
considered - the answer is no.
makes sense and thanks.
stephen
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