It pays to vote

When I got Canon's proxy for the 2004 annual meeting, I read that the company wants to add an item to their by-laws:

The objects of the Company shall be to engage in the following business: ... (8) Manufacture and sale of pharmaceutical products

Today I found out that Canon is hoping to sell DNA chips which can be used to diagnose patients. From the press reports, it sounds like Canon will be able to use bubble jet technology to print the chips, which could cost far less then current methods. If successful, these products could help doctors arrive at more accurate diagnoses and researchers understand the genetic code.

While this is exciting news for investors, there's really no way to know how much future earnings this might generate. Most likely this will never account for more than a few percent of sales and may never become profitable. But it's fun to imagine Canon becoming a bioinformatics company at least in part. Certainly it suggests that Canon's R&D department is functioning well.

Actually this news is potentially negative as well. Copy machines, printers and digital cameras are increasingly competitive and low-margin products, in which Canon has remained one step ahead of everyone else. But as airline investors know, being number one isn't always rewarding. So Canon is compelled to find new products (such as flat-panel screens and portable printers), which is a riskier strategy than the cost-cutting that marked the last ten years.

For the next five years, the company is beginning phase three of its "Excellent Global Corporation Plan". Now, it will focus on "Healthy Expansion". Investors can dream that the phrase is quite literal.