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Using WordPress blogs to build backlinks

Mart
in Linkbuilding
I've recently been looking at the backlinks of a competitor and many of them come from individual Wordpress blog pages that seem to stand alone. There's usually a couple of paragraphs of relevant text on each page and, whilst they contain keywords, some of the sentences don't make grammatical sense. The URLs for these pages typically follow the below example (that I've made up for illustrative purposes):

fghgfh.rtyrtyr.com/2011/11/29/nameofcompany-keyword-location/

Anyone know what's going on here? Are these mechanically generated Wordpress subdomains created solely for the purpose of building backlinks? Are they manually built? Are they the result of WordPress SEO plugins?

Thanks in advance to anyone who can shed some light on this. I suspect it's a common link building tactic although it looks a bit grey/black hat to me so not sure how it stands in relation to Panda(?)
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