http://www.seomoz.org/article/search-ranking-factors#f46

This link lists factors in google search rankings. It seems that the quality of links is judged as a factor and that links to spam sites will have a significant negative impact on the ranking.
Source(s):
http://www.seomoz.org/article/search-ranking-factors

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I don't have any sources to back this up, but I'll give my personal opinion. I have designed a few sites that are ranked decently well for their respective terms. I disagree with the idea that having more external links on your page lowers its rank. There are several reasons but I'll give you the most obvious one.

Google has something called AdSense. It allows you to place ads on your site through Google's AdWords setup. Google pays you money for hits to those sites through your ads. This typically adds an additional 3 external links to your site. If Google penalized people for having additional links on their site, they'd be penalizing their own customers who are making them money.

Not to mention that some sites need to have many external links as part of their structure. Wikipedia ranks pretty well with it's millions of external links.

Much more important than the number of external links is the quality or relation between those links. If you have 20 links to completely different and useless pages, it won't help your ranking, but I doubt it will hurt it.

In contrast, if you have 20 external links that are to pages similar to yours(i.e. your sock page links to shoe sites), then your ranking will be improved. Because you're providing the relevant content, it proves that your site and theirs has additional relevancy for said terms.

Just my opinion on this one, no backup.
Source(s):
https://www.google.com/adsense/login/en_US/

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According to this forum, outgoing links decrease a page's rank, and incoming links increase a page's rank.

Do outward links increase pagerank?
Will adding outward ranks help?
http://www.webmasterworld.com/forum3/17405.htm

Here is more on Page rank:

PageRank Leakage and Large Directory Sites
Why doesn't PR leakage seem to make much difference?
http://www.webmasterworld.com/forum3/23513.htm

Do Visitors to a Site Increase PageRank? http://www.webmasterworld.com/forum30/29927.htm

PageRank:
http://en.wikipedia.org/wiki/PageRank
Source(s):
http://www.webmasterworld.com/forum3/17405.htm
http://www.webmasterworld.com/forum3/23513.htm
http://www.webmasterworld.com/forum30/29927.htm
http://en.wikipedia.org/wiki/PageRank

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Absolutely yes. As a matter of fact, google recently penalized those blogs with numerous links in their blog. PR4 blog selling links in their weblogs became PR2. If you want to optimize your website or blog for search engine, you should avoid putting external links in your website. Instead, aim to have many incoming links (in layman's term, it is better if other blogs/websites link to your blog) .This is because page rank algorithm gives higher points to those website with many incoming links than outgoing links.

The information from wikipedia would suffice if you want to know more about pr: http://en.wikipedia.org/wiki/PageRank

Please read this article if you want to optimize your blog for search engines and have a higher page rank: http://www.problogger.net/archives/2006/11/24/how-to-optimize-your-blog-for-search-engines/

To know your page rank:
http://www.prchecker.info/check_page_rank.php
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The truth is "nobody knows". Google is constantly changing their ranking algorithms, and they keep the details confidential.

One thing that is known is that if you put links are your site that are PAID (i.e., someone pays you to link to their site), Google may penalize your site for trying to pass PageRank to other sites "artificially".

http://www.google.com/support/webmasters/bin/answer.py?hl=en&answer=66736

If you are getting paid to put a link on your site, be sure to use the rel="nofollow" attribute so Google will not penalize you.

Google even has a "snitch" program, for people to report abuses of paid links to them:

https://www.google.com/webmasters/tools/paidlinks
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External links hurt the page's rank if the other sites have low page ranks, if they deal with unrelated subjects or if they are involved in schemes of linking back to the site. The best way to deal with this, from a technical perspective, is to add the "nofollow" attribute on all of the links that are unrelated or that you cannot trust. That way, google will not follow those links and will not hurt your page rank. But the most important thing is which sites are linking back to you, and what page rank do they have.

Take for example alvit's handbook, which is basically a list of external links: http://www.alvit.de/handbook/
We can check this page's pagerank with http://www.smartpagerank.com/bulk-pagerank-checker.php
It is 4.
We can also check the backlinks for that page and see others' page ranks: http://www.smartpagerank.com/pagerank-backlinks.php
They have different sites with different page ranks linking back at them, most of them not reaching 5, so it is understandable.
Source(s):
Link schemes
http://www.google.com/support/webmasters/bin/answer.py?answer=66356

Google PageRank Explained
http://www.smartpagerank.com/pagerank-explained.php

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There seems to be disagreement on this topic. Some people think that outgoing links that are quality links relevant to your site actually enhance your ranking. Others think that your site loses value the more links it has. It is very confusing.

I experimented with a page on my informational site. It had around 20 links to various wineries which were relevant to my wine tasting site. These links were not paid. I had a page rank of 4. When I made them all no follow links, my page rank dropped to 3 in about a month. I'm taking off the no follow tag and will see what happens.
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