Foreign Domains - a Penalty in SERPs?

Does a 'foreign' domain result in penalties in the SEs?

[medowl]

A friend has a US company with a .cc domain name for the website (.cc = Cocos Islands) - apparently, the .coms for variants of the company name were taken, so they took a .cc instead.

Will the foreign domain hurt them with the search engines? This company provides services to clients in the Southeast US. Their SERPs on their own name are dismal for Google and MSN, ok for Yahoo and AskJ (which could be due to a variety of factors).

Any ideas how geographic the algorithms are? Would Goog or MSN assume that most .cc names are not really on a tiny rock in the Indian Ocean, or is there a geographic penalty for having a less common domain name?

[nativenewyorker]

There is a belief that the search engines are returning more geographically targeted results than they were previously. A country code is one factor that the search engines may use. Another is the location of your IP address / datacenter. As your friend is using a foreign ccTLD to target the US market, I would strongly suggest that he / she check to see if their website is using a US based IP / datacenter.

[bhartzer]

geographically targeted results

The engines look at where the site is actually hosted to determine its geographic location.

A .cc site has just as good a chance at ranking as a .com site does if both are hosted in the US.