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Google - Subdomains and Subdirectories
http://news.softogether.com/content/8/1/Google---Subdomains-and-Subdirectories/Page1.html
Paul Never
 
By Paul Never
Published on 01/16/2008
 
Matt Cutts, software engineer at Google writes:

For several years Google has used something called “host crowding,” which means that Google will show up to two results from each hostname/subdomain of a domain name. That approach works very well to show 1-2 results from a subdomain, but we did hear complaints that for some types of searches (e.g. esoteric or long-tail searches), Google could return a search page with lots of results all from one domain. In the last few weeks we changed our algorithms to make that less likely to happen in the future.

This change doesn’t apply across the board; if a particular domain is really relevant, we may still return several results from that domain. For example, with a search query like [ibm] the user probably likes/wants to see several results from ibm.com ... Read the full article here