Fourth-quarter net income at Fidelity National Financial Inc., the Jacksonville, Fla., provider of title insurance and financial technology, was off 34% from a year earlier, dragged down by taxes.
But full-year earnings were up, and the company said it expects to buy companies and increase its stake in some.
The $100 million tax charge, which had been expected, was on an October stock distribution of 17.5% of its title insurance business to shareholders. The charge reduced net income to $115.2 million.
Without the charge earnings would have risen 23%, to $215.2 million, the company said Wednesday. Fourth-quarter revenue rose 16%, to $2.43 billion.
Full year net income rose 30%, to $964.1 million. Revenue rose 17%, to $9.67 billion.
Fidelity National has been restructuring its operations. On Feb. 1 it merged its technology unit with the St. Petersburg, Fla., transaction processor Certegy Inc., to create the publicly traded Fidelity National Information Services Inc., which is 51% owned by Fidelity National. (The title insurance unit is also publicly traded.)
Fidelity National also has a specialty insurance unit, and last month the company got a foothold in a new business by buying a 40% stake in the Memphis claims manager Sedgwick CMS Holdings Inc.
William P. Foley 2d, Fidelity National's chairman and chief executive, said Thursday on a conference call with analysts that his company is "now operating as a holding company with four distinct subsidiaries."
He said he might expand any of these businesses through acquisition. Asked whether he would increase the stake in Sedgwick, he did not get specific but said, "We like owning a controlling interest, not minority interest."
Mr. Foley said that Certegy's transaction processing services "fill a gap" in Fidelity National Information Services' capabilities and that "we are very serious about not only maintaining our 50%-plus position, but expanding that position."
Fidelity National offered little detail about how its technology unit plans to operate now that it has merged with Certegy. Neither did the processor on its own fourth-quarter conference call, its last, on Jan. 27 - but both have promised a look under the hood at an investor conference Feb. 15.
Fidelity National's revenue was boosted last year by processing hurricane flood claims, and though most of that work is complete, it expects about $15 million in revenue in the current quarter from flood claims. The company cautioned that flood claims revenue is likely to drop this year, affecting earnings comparisons for 2006.
Geoffrey M. Dunn, an analyst at Keefe, Bruyette & Woods, said that Fidelity National's ambitious acquisition efforts have made it increasingly complex, effectively making it four companies in one. However, "inside that complication is where there's opportunity," he said. "The value of the company is still there. The operations are still doing well."
Mr. Dunn said he was not surprised by Fidelity National's plans to increase current stakes and buy some companies. "They're going to do a lot more acquisitions here," he said. "I wouldn't be surprised if ... [Mr. Foley] builds up an operation with a lot of scale, and we get a third publicly traded company down the road."
