Will I get penalised for display:none ?
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I have initial content that is dislayed for 10secs and then collapsed and replaced by a div that was hidden (display:none). Will the hidden text be used by Google or will they consider it as page stuffing? If so, is there any recommendations on how to handle this. The goal was to maxamize screen real estate for the human visitor without adding clutter.
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Outside of specific search engine employees I think that it will be a very very rare person who can give you an answer about this that you would be willing to bet your site's performance on.
When I am in that situation I follow the known route.
Of course, you could experiment with this site or a less important one and then let us know what happens.

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Google employees have communicated at various times:
- It's never a good idea to hide content
- It all depends on your intent
- You're free to do what you want and we're free to penalize you if we want
So pick your choice and run with it. As EGOL suggests, if you try it out, let us know how it works out for you. Me, I always recommend that clients avoid the display:none method at all costs. But that's just my preference from a "better safe than sorry" perspective.
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The content is only hidden in the form of jquery collapsing panel via $(this).slideToggle() so that some content is displayed to the visitor and then replaced 10 secs later with new content. This is common in flash where a given piece of screen will be replaced with changing content.
How do you suggest this type of changing content should be delivered to make it SEO friendly? I thought of having javascript collapse the panel onload by that makes the screen resize and do nasty things in Explorer.
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We do that all the time in our web development. Like Alan pointed out, it all depends on intent. If you were trying to hide some keyword stuffing or anchor text links in an display:none div, well that could get you in trouble, but what you are doing is a normal and common use of display:none on the web. You have nothing to worry about.