International Business Machines Corp. has sold its equity interest in Hogan Systems Inc. back to the software maker, ending a key part of the close relationship between the two companies.

The sale of approximately 5% of Hogan's common stock to Hogan was said to be profitable for IBM, Armonk, N.Y., and potentially profitable for Dallas-based Hogan.

"The strong increase in the price of Hogan's stock has provided us with a very good return on this investment," Michael Szeto, IBM's director of business development, said in a prepared statement.

Seeking Better Return

Hogan did not disclose how much it paid to buy back its stock, which was purchased in a private transaction.

But when IBM bought the Hogan stock in 1986, it was trading at between $2.50 and $3.50 a share. The stock was at $10.50 when IBM sold the stake back to Hogan last week.

Hogan officials hope to make a better return from Hogan stock than from holding cash.

Richard Bove, a director of Baird, Patrick & Co. in New York, who follows Hogan stock, estimated the earnings boost this year for Hogan at between three quarters of a cent and 1.5 cents per share.

Further Distancing Seen

In the fiscal year ended March 31, Hogan had revenues of $64.5 million, net income of $5.5 million, and earnings per share of 38 cents.

Hogan said in a prepared statement that the sale will have no impact on IBM'S exclusive rights to market Hogan software in North America and Latin America.

But some observers predicted that Hogan may further back off its relationship with IBM by ending that agreement.

"My feeling is that Hogan doesn't need IBM, and that's what's between the lines," said M. Arthur Gillis, a bank technology consultant in New Orleans.

Mutual Gains

The exclusive marketing relationship has been credited with bolstering Hogan's reputation, and helping IBM sell mainframe computers.

The partnership began in 1986, when IBM obtained exclusive marketing rights to Hogan's core banking software, which runs on IBM mainframes. In return, IBM purchased the 5% stake in Hogan and paid the company $10 million a year in royalties.

The deal was renegotiated in 1990, so that IBM stopped paying the royalty. Instead, IBM and Hogan split the revenues from software sales, and Hogan assumed marketing responsibility for its bank earnings analysis software.

More than 100 large banks in the United States and abroad use Hogan software, including BankAmerica Corp. and Citicorp.

Going It Alone?

Daniel Johnson, a Hogan senior vice president, said it is not clear yet if Hogan and IBM will extend the current exclusive marketing agreement after it expires in 1995.

"We continue to discuss and evaluate that," he said.

Mr. Bove said he would not be surprised if the agreement were terminated, since Hogan officials would like to sell more software, and the best way for them to do that may be to market it themselves.

Sights Set Higher

Mr. Johnson acknowledged that Hogan officials would like IBM to sell more software.

"We always have our sights set for higher and better performance," Mr. Johnson said.

He added that Hogan wants "to get more direct involvement" with its customers.

In a related matter, John J. Higgins, an IBM vice president, resigned from Hogan's board of directors because IBM no longer owns a stake in the company.

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