Interlinq Software Corp., a developer of mortgage origination systems, hopes its struggling days-in spite of its leading market share and the blessings of low interest rates-are over.

The Kirkland, Wash., company, which has sold its origination software to 2,000 lending institutions, has floundered in recent years with management problems and an unremarkable product line.

The company must also support a geographically diverse customer base that ranges in size from $10 million to $10 billion a year in originations.

Interlinq, formed in 1982, hopes to raise its stature among customers and investors alike with new workflow software, called FlowMan, that can tie together disparate systems and applications to achieve a more productive and efficient operation. And it has honed its story to woo Wall Street investors back into the fold.

Interlinq's stock had languished at around $4 a share since 1995, down from a 1994 high of $8.50. But it has fared better in recent trading. Its shares were selling at $6.50 Monday, up 36% for the year, buoyed in large part by the company's nearly completed program to repurchase 1.5 million shares. Five million shares are outstanding.

The new software helped bolster its revenue to $5.5 million for the quarter ended June 30, a 48% increase from a year earlier.

Net income for the quarter was $745,000, a 111% increase from a year earlier. The numbers exclude several charges, including the $5 million acquisition of Logical Software Solutions Corp.

Interlinq earned 14 cents per share before charges, compared with 6 cents a year earlier.

"Our core business is flourishing," said Jiri Nechleba, president and chief executive officer, who was hired three years ago.

"I would admit that the environment has helped," he added. "It's been a pretty good year for the industry in general."

Jeff Lebowitz, a mortgage technology analyst and publisher of the influential "Mortech Survey," due in October, said Mr. Nechleba is a marketing and business guru who just might lead the company to prosperity.

Mr. Nechleba, who joined Interlinq from Dun & Bradstreet three years ago, "had problems," Mr. Lebowitz said. "He had an aging product line and unhappy investors."

Mr. Lebowitz said Mr. Nechleba has "increased awareness and reinforced the profile of the company," adding that "he has conveyed the impression of being an innovator."

Interlinq is poised to crack the servicing market dominated by Alltel Corp., which services 50% of all loans. Interlinq has sold its loan servicing software to 100 institutions.

It is a business that Mr. Nechleba desperately wants to shore up, to offset the potential downturn if the origination market goes soft.

Rob Owens, an analyst at Pacific Crest Securities, said Interlinq is closely tied to the general economy. However, it has a loyal customer base.

The stock, which trades at only about 12 times its estimated 1999 earnings of 52 cents per share, "is off of every one's radar screen given its size," Mr. Owens said. "But it's a quality company that has strong management, a strong market position, and a strong message too."

Mr. Owens rated the company a "strong buy." He said he expects Interlinq, which has $11 million in cash and no debt, to trade between $10 and $12 per share in the next 12 months.

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