They have some merit, but not value.
I can see that they have some merit. We have a site with many sub-domains as well (which shall remain nameless at this time.) It has one sub-domain that is popular, but that's because the terms that sub-domain is optimized for is much more popular than the terms on the other sub-domains.
I took 4 of the sub-domains a while back and moved them to directories under the main domain. Guess what - they rank almost exactly where the sub-domain did, one of them much higher. 301's made the transition pretty smooth.
I was going to test it out with about 6 others here shortly since it's just a "for fun" site right now and doesn't really need any traffic. There is no reason why I can't experiment with it.
I'll let you know the results.
Brian.
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