The largest detractor from performance was Canon (CAJ), a Japan-based professional and consumer solutions company, which lost 8%. Canon’s first quarter results were weaker than expectations and guidance. Camera sales were hit particularly hard due to excess inventory stocked up after the Thai floods. Demand did not come through as expected, particularly in China and Europe, so heavy discounting was used to move excess inventory. For the remainder of the year, Canon should scale back these steep discounts, which will improve margins. Canon’s office segment also produced weak results; however, a recent refresh of their entire lineup of printers should help that division. Despite Canon’s disappointing first quarter results, we believe it remains a good long-term investment opportunity for our shareholders.
From the Oakmark Global Select Fund second quarter 2013 commentary.