FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



             ( X ) Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                For the quarterly period ended December 27, 1998

                                       or

              ( ) Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

         For the transition period from _____________ to ______________

                       Commission file number : 000-23457


                        ENTEX INFORMATION SERVICES, INC.

             (Exact name of registrant as specified in its charter)


                       Delaware                     13-3715291
             (State or other jurisdiction        (I.R.S. Employer
                  of incorporation)            Identification Number)

                 6 International Drive, Rye Brook, N.Y. 10573-1058
                                 (914) 935-3600

     (Address, including zip code and telephone number, including area code, of
                           principal executive offices)

            Indicate  by check mark  whether  the  registrant  (1) has filed all
         reports required to be filed by section 13 or 15(d) of the
            Securities  and  Exchange  Act of 1934 during the  preceding  twelve
             months, and (2) has been subject to such filing
                     requirements for the past ninety days:
                                YES ( X ) NO ( )

           The number of outstanding  shares of the  Registrant's  Common Stock,
            par value $.0001 per share, was 32,435,195 (excluding 82,500
                      treasury shares) on January 24, 1999.




<PAGE>








                        ENTEX INFORMATION SERVICES, INC.

                                     INDEX

                                                                   Page Numbers
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets as of
        December 27, 1998 and June 28, 1998                              2

        Consolidated Statements of Operations
        For the Three and Six Months Ended December 27, 1998
        and December 28, 1997                                            3

        Condensed Consolidated Statements of Cash Flows for
        the Six Months Ended December 27, 1998
        and December 28, 1997                                            4

        Notes to Condensed Consolidated Financial Statements           5 - 6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations                            7 - 14



PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K                                 15

        Signatures                                                       16




<PAGE>

                        ENTEX INFORMATION SERVICES, INC
                         Part I - Financial Information
                          Consolidated Balance Sheets
                    (Dollars in thousands except share data)

<TABLE>
<CAPTION>

                                                        Unaudited
                                                       December 27,     June 28,
                                                          1998            1998
<S>                                                   <C>             <C>        
                                                       -----------     ---------
                                     Assets
Current assets:
   Cash and cash equivalents                           $ 19,635        $ 14,265
   Trade receivables (net of allowance for doubtful
      accounts of $4,573 and $4,662, respectively)      369,098         368,344
   Vendor receivables (net of allowance of $3,187
      and $3,787, respectively)                          51,253          47,592
   Inventories                                          142,026         192,841
   Other current assets                                   6,808           8,683
                                                      ---------       ---------
         Total current assets                           588,820         631,725
                                                      ---------       --------- 
                                                                                   
Property, plant and equipment, net                       52,669          61,009
Goodwill (net of accumulated amortization of 
   $14,805 and $12,861, respectively)                    39,833          41,929
Other assets, net                                         6,172           1,756
                                                      ---------       --------- 
   Total assets                                        $687,494        $736,419
                                                      =========       =========                                    
                 
                 Liabilities and Stockholders' Equity (Deficit)
                                                                             
Current liabilities:                                                                             
   Accounts payable                                    $331,461        $338,602
   Accrued liabilities                                   72,656          67,381
   Notes payable and current installments 
      of long-term debt                                 217,617         295,681
                                                      ---------       --------- 
          Total current liabilities                     621,734         701,664
                                                      ---------       ---------
Long-term debt                                          132,895          53,239
Other long-term liabilities                                 477             661
                                                      ---------       ---------
          Total long-term liabilities                   133,372          53,900                           
                                                      ---------       ---------
Total liabilities                                       755,106         755,564  
                                                      ---------       ---------
                                                                              
Stockholders' equity (deficit): 
                                                                            
Preferred stock, 2,000,000 shares authorized;                                 
   no shares issued or outstanding                         --              --
Common stock,  $.0001 par value;  100 million
   shares authorized, 32,429,910 and 32,413,366
   shares issued and outstanding, respectively                3               3          
Additional paid-in capital                               19,576          19,477
Retained earnings (deficit)                             (87,161)        (38,564)
Accumulated other comprehensive income                      (28)            (59)
Treasury stock, 82,500 shares at cost                        (2)             (2)
                                                       --------        --------
   Total stockholders' equity (deficit)                 (67,612)        (19,145)
                                                       --------        --------
                                                       $687,494        $736,419
                                                       ========        ========
                                                                             
                                                        

                                                                            
     See accompanying notes to condensed consolidated financial statements.

                                     Page 2
</TABLE>

<PAGE>






                        ENTEX INFORMATION SERVICES, INC.
                      Consolidated Statements of Operations
                  (Dollars in thousands except per share data)

<TABLE>
<CAPTION>
                                               Unaudited                                  Unaudited
                                           ------------------                        ------------------   
                                 Three Months Ended   Three Months Ended     Six Months Ended    Six Months Ended
                                     December 27,        December 28,           December 27,        December 28,
                                        1998                1997                    1998                 1997
                                 ------------------   ------------------     ----------------    ----------------
<S>                             <C>                  <C>                   <C>                   <C>

Net revenues:                                                                                        
   Product revenues              $    500,282         $     543,758          $     938,533        $   1,044,696
   Service revenues                   124,386               110,622                241,274              216,523
                                 ------------         -------------          -------------        -------------
          Total net revenues          624,668               654,380              1,179,807            1,261,219
                                 ------------         -------------          -------------        -------------

Costs and expenses:
    Cost of products sold             457,929               486,318                863,408              937,099
    Cost of services provided          92,465                86,953                177,366              166,825
    Inventory charges                   5,000                  --                    5,000                 --
    Selling, general and                                                    
      administrative expenses          68,324                63,323                137,181              125,138
    Restructuring costs                14,000                  --                   14,000                 --
    Unusual charges                    13,300                  --                   13,300                 --    
                                  -----------           -----------            -----------          -----------
Income (loss) from operations         (26,350)               17,786                (30,448)              32,157
   
    Interest expense, net               9,015                 9,327                 18,710               18,996
          Other income                   (575)                 --                     (575)                --                  
                                  -----------           -----------            -----------          -----------  
Income (loss) before income taxes     (34,790)                8,459                (48,583)              13,161  
                                                                       
    Provision for income taxes              6                     6                     14                    8
                                  -----------           -----------            -----------          -----------
Net income (loss)                 $   (34,796)          $     8,453            $   (48,597)         $    13,153
                                  ===========           ===========            ===========          ===========              
 
Common share data:                                                                 

Basic earnings (loss) per share   $     (1.07)          $       .26            $     (1.50)         $       .41
                                  ===========           ===========            ===========          =========== 
  
Diluted earnings (loss) per share $     (1.07)          $       .25            $     (1.50)         $       .39
                                  ===========           ===========            ===========          ===========
                              
  Basic weighted average number                                            
  of shares of common stock
  outstanding                      32,428,243            32,399,060             32,409,532           32,399,060
     
  Common equivalent shares from
  stock options and warrants using      --                1,328,665                  --               1,328,665  
  the treasury stock method
                                   -----------          -----------            -----------          -----------            
  Diluted weighted average number
  of shares of common                                                              
  stock outstanding                 32,428,243           33,727,725             32,409,532           33,727,725 
                                   ===========          ===========            ===========          ===========





         See accompanying notes to condensed consolidated financial statements.


                                         Page 3


</TABLE>

<PAGE>


                        ENTEX INFORMATION SERVICES, INC.
                 Condensed Consolidated Statements of Cash Flows
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                          Unaudited
                                                      Six Months Ended
                                           December 27,             December 28,
                                              1998                      1997
                                              ----                      ----
<S>                                         <C>                     <C>

Net cash provided by operating activities    $ 19,300                $  58,816

Cash flows from investing activities:
   Capital expenditures                       (11,493)                  (7,021)
                                            ---------                ---------
      Net cash used in investing activities   (11,493)                  (7,021)                                                
                                            ---------                ---------     
Cash flows from financing activities:
   Proceeds from borrowings                   147,719                   70,979
   Change in cash overdraft                     1,581                  (15,399)
   Payments on debt                          (151,737)                (139,294)
                                            ---------                ---------
      Net cash used in 
        financing activities                   (2,437)                 (52,916)
                                            ---------                ---------
Increase (decrease) in cash
   and cash equivalents                         5,370                   (1,121)

Cash and cash equivalents:
   Beginning of period                         14,265                   15,838   
                                            ---------                ---------  
   End of period                            $  19,635                $  14,717                                           
                                            =========                ========= 
                                                                       
                                                                              
Supplemental disclosure of cash 
   flow information:                     
                                                                        

   Interest paid                            $  12,849                $  19,574
                                            =========                =========
   Income taxes paid (refunded)             $     817                $    (632)
                                            =========                =========



                                                                         

     See accompanying notes to condensed consolidated financial statements.


                                     Page 4
</TABLE>

<PAGE>


                        ENTEX INFORMATION SERVICES, INC.
              Notes to Condensed Consolidated Financial Statements



1. Basis of Presentation

The unaudited condensed  consolidated  financial statements included herein have
been  prepared  by the  Company  pursuant  to the rules and  regulations  of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted pursuant to such
rules and regulations. However, in the opinion of management of the Company, the
condensed  consolidated  financial  statements  include all  adjustments,  which
consist  only of normal  recurring  accruals,  necessary  to present  fairly the
financial information for such periods.  These condensed  consolidated financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended June 28, 1998.

Cash equivalents include  short-term,  highly liquid investments with a maturity
of  three  months  or less  from  the  date  of  acquisition.  Included  in cash
equivalents are treasury notes of approximately $6 million to be used to finance
a February 1, 1999 interest payment and are therefore restricted.

The results of  operations  for the six months  ended  December 27, 1998 are not
necessarily  indicative of the results to be expected for the fiscal year ending
June 27, 1999.


2. Special Items

In November 1998, the Company's Board of Directors authorized management actions
that resulted in the  reorganization of ENTEX's business to create two operating
units: a Technology Acquisition Services Division and a Services Division,  each
functioning as a separate operating division within ENTEX Information  Services.
The reorganization  was intended to reduce costs and increase  operational focus
to respond to new market dynamics.

As a result,  during the second  fiscal  quarter  ended  December 27, 1998,  the
Company recorded a restructuring charge of $14 million. The restructuring charge
includes $7 million to cover costs related to involuntary  severance benefits in
connection with a workforce reduction affecting  approximately 450 employees, of
which  approximately  300 had left the Company at December 27, 1998.  Reductions
occurred in virtually all areas of the Company.  In addition,  the restructuring
charge  includes $7 million in  connection  with branch  office  consolidations,
facilities  reductions and other costs. As of December 27, 1998, $4.5 million of
costs have been charged  against the reserve.  The  remaining  liability of $9.5
million at December 27, 1998, primarily relates to future lease obligations, net
of  estimates  of  sublease  income and  remaining  severance  payments,  and is
classified as accrued liabilities in the consolidated balance sheet.

Also,  during the second  fiscal  quarter ended  December 27, 1998,  the Company
recorded  unusual  items  totaling  $18.3  million  (of which  $15.7  million is
non-cash) in connection with the  reorganization.  These  non-recurring  unusual
items  consist  of  $10.7  million  related  to  the  Company's  abandonment  of
implementation of the R3TM Enterprise Resource Planning System ("ERP") from SAP,
$5 million,  recorded as cost of revenues, to expedite the liquidation of excess
finished goods and spare parts, and $2.6 million primarily related to incentives
to employees during the restructuring effort.


                                     Page 5

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
              Notes to Condensed Consolidated Financial Statements



In addition,  during the second  fiscal  quarter  ended  December 27, 1998,  the
Company  recorded a gain of $575,000 in connection with the early  retirement of
$1.4 million of BusinessLand Incorporated debentures.  The gain is classified as
other income in the consolidated statement of income.


3. Comprehensive Income

Effective  for the  quarter  ended  September  27,  1998,  the  Company  adopted
Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income"  ("FAS 130").  Comprehensive  income  includes both net income and other
comprehensive  income.  Included  in  other  comprehensive  income  are  foreign
currency   translation  gains  (losses).   In  accordance  with  the  disclosure
requirements  of FAS 130,  comprehensive  income  (loss)  for the  three and six
months  ended  December  27,  1998  and  December  28,  1997 was  $(34,794)  and
$(48,566),  and $8,454 and $13,146,  respectively.  Other  comprehensive  income
(loss) for the three and six months  ended  December  27, 1998 and  December 28,
1997 was $2 and $31, and $1 and $(7), respectively.

























                                     Page 6

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
          Management's Discussion and Analysis of Financial Condition
                           and Results of Operations



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

This section contains trend analysis and other forward-looking  statements based
on current expectations. Actual results may differ materially due to a number of
factors.  Reference is made to the  Company's  Annual  Report on Form 10-K for a
further discussion of certain business factors.

Overview

ENTEX is a leading provider of integrated  personal  computer ("PC")  management
solutions to meet the distributed  information  technology  systems and end-user
support  requirements  of Fortune 1000  companies  and other large  enterprises.
ENTEX  offers  its  customers  a single  source  for  integrated  PC  management
solutions, including sophisticated infrastructure and configuration, outsourcing
and desktop migration and integration services.

The Company has two principal  sources of revenue:  product revenues and service
revenues.  Product  revenues  include  acquisition  and  procurement of personal
computer  and network  products,  software  and  peripherals.  Service  revenues
include network services,  professional  services,  outsourcing services, PC and
network  operation  support  services,  on-site and centrally  located help desk
services, as well as asset management services.


























                                     Page 7

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
         Management's Discussion and Analysis of Financial Condition and
                             Results of Operations



Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
        OF OPERATIONS

Results of Operations

The following table sets forth the percentage of total net revenues  represented
by the items in the Company's statements of operation for the periods indicated:

<TABLE>
<CAPTION>
                                
                                     Three Months Ended                 Six Months Ended
                             December 27,        December 28,     December 27,     December 28,
                                1998                1997              1998             1997
<S>                            <C>                 <C>               <C>             <C>

Net revenue:                                                                                     
  Product revenues              80.1%               83.1%             79.5%            82.8%
  Service revenues              19.9                16.9              20.5             17.2
                               -----               -----             -----            -----
     Total net revenues        100.0               100.0             100.0            100.0

Cost of products sold           73.3                74.3              73.2             74.3                  
Cost of services provided       14.8                13.3              15.0             13.2                  
Inventory charges                 .8                 --                 .4              --
Selling, general and                                       
   administrative expenses      10.9                 9.7              11.6             10.0
Restructuring costs              2.3                 --                1.2              --
Unusual items                    2.1                 --                1.1              --
                               -----               -----             -----            -----
Income (loss) from operations   (4.2)                2.7              (2.5)             2.5                               
                                                                                       
Interest expense, net            1.5                 1.4               1.6              1.5        
                                                                                                            
Other income                     (.1)                --                --              --    
                               -----               -----             -----            -----                                 
                                                                                    
Income (loss) before 
   income taxes                 (5.6)                1.3              (4.1)             1.0
                                                                                                                              
Provision for income taxes       --                  --                 --              --                             
                               -----               -----             -----            -----               
                                                                                                     
Net income (loss)               (5.6)%               1.3%             (4.1)%            1.0%
                               =====               =====             =====            =====
                                                    
                          
</TABLE>

                             
(1) Product gross margin as a percentage of product  revenues and services gross
margin as a percentage of service revenues (excluding unusual inventory charges)
for each period was as follows:

                           Three Months Ended              Six Months Ended    
                        Dec. 27,        Dec. 28,       Dec. 27,         Dec. 28,
                          1998           1997            1998             1997
                          ----           ----            ----             ----

Product gross margin       8.5%          10.6%           8.0%            10.3%
Services gross margin     25.7%          21.4%          26.5%            23.0%



                                     Page 8
<PAGE>


                        ENTEX INFORMATION SERVICES, INC.
        Management's Discussion and Analysis of Financial Condition and
                             Results of Operations


Three Months Ended December 27, 1998 Compared to Three Months Ended 
December 28, 1997

     Consolidated  net loss for the three  months  ended  December  27, 1998 was
$34.8 million  compared to consolidated  net income of $8.5 million in the three
months ended  December 28, 1997.  The results for the second  fiscal  quarter of
1999 include a  restructuring  charge and related  non-recurring  unusual  items
totaling  $32.3 million (of which $16.1 million is non-cash) and a $575,000 gain
on the early retirement of $1.4 million of debt.  Excluding these items, the net
loss for the quarter ended  December 27, 1998 would have been $3.1 million,  and
was primarily a result of a decrease in product  revenues and the  corresponding
gross margin, as well as increased selling, general and administrative expenses,
partially offset by increased service revenues and services gross margin.

     Product revenues: Product revenues were $500.3 million for the three months
ended December 27, 1998 as compared to $543.8 million for the three months ended
December  28,  1997, a decrease of $43.5  million or 8.0%.  The revenue  decline
primarily  reflects  gross margin  pressure as well as declining  average  sales
prices.
         
     Service revenues: Service revenues were $124.4 million for the three months
ended December 27, 1998 as compared to $110.6 million for the three months ended
December 28, 1997, an increase of $13.8 million or 12.4%. The increase  reflects
increased demand from existing customers and the addition of new large accounts.
Service  revenues as a percentage  of total net revenues  increased to 19.9% for
the quarter  ended  December 27, 1998 as compared to 16.9% in the quarter  ended
December 28, 1997 due to higher service  revenues  coupled with a decline in the
product  business.  The Company is focused on  continuing  to  increase  service
revenues.

     Gross margins:  Total gross margins  declined to 11.1% for the three months
ended December 27, 1998 as compared to 12.4% for the three months ended December
28,  1997.  Excluding  the  non-recurring  unusual  charge  to  record  costs to
liquidate excess finished goods inventory,  product gross margin as a percentage
of product  revenues  was 8.5% or $42.4  million  for the  current  quarter,  as
compared to 10.6% or $57.4 million for the three months ended December 28, 1997.
The decrease is  primarily  the result of pricing  pressures  and a reduction in
vendor incentive programs. Including the unusual charge, product gross margin as
a percentage of product revenues declined to 7.7% or $38.4 million for the three
months ended December 27, 1998.  Excluding the costs to expedite the liquidation
of excess spare parts,  services  gross margin  increased  $8.3 million or 34.7%
during the current quarter to $31.9 million reflecting operating efficiencies on
increased  service  revenues.  Including  these  costs,  services  gross  margin
increased $7.3 million or 30.6% to $30.9 million.

     Selling,  general  and  administrative   expenses:   Selling,  general  and
administrative expenses as a percentage of total revenues increased to 10.9% for
the  quarter  ended  December  27, 1998 from 9.7% in the same period a year ago,
reflecting  increased  expenditures as well as lower sales volume in the product
business.  For the three months ended  December 27, 1998,  selling,  general and
administrative  expenses were $68.3 million as compared to $63.3 million for the
quarter  ended  December  28,  1997,  an  increase of $5.0  million,  reflecting
increased  investments in company-wide  infrastructure  and field  operations to
support service business growth.


                                     Page 9

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
        Management's Discussion and Analysis of Financial Condition and
                             Results of Operations


     Income (loss) from  operations:  Loss from operations was $26.4 million for
the three months ended  December 27, 1998 as compared to income from  operations
of $17.8 million in the quarter ended December 28, 1997. The loss reflects a $14
million  restructuring charge and $18.3 million in non-recurring  unusual items,
as well as the  decline  in gross  margin  on  product  revenues  and  increased
selling,  general and  administrative  expenses,  partially  offset by increased
gross margin on service revenues. Excluding the restructuring charge and unusual
items,  income from  operations for the quarter ended December 27, 1998 was $5.9
million.  See Note 2 to the  condensed  consolidated  financial  statements  for
additional details concerning the restructuring charge and unusual items.

     Interest expense,  net: Net interest expense remained essentially unchanged
for the three  months  ended  December  27, 1998 as compared to the three months
ended December 28, 1997. This is a result of reduced borrowing rates,  partially
offset by increased debt levels in the current quarter, compared to the year ago
period.

     Other income: Other income for the second fiscal quarter ended December 27,
1998, represents a $575,000 gain on the early retirement of debt.

     Provisions  for income  taxes:  The Company  utilized  net  operating  loss
carryforwards  to offset  federal income tax  requirements  for the three months
ended December 28, 1997.

     Net income (loss): As a result of the factors mentioned above, the net loss
for the three  months ended  December 27, 1998 was $34.8  million as compared to
net income of $8.5 million for the three months ended December 28, 1997.


Six Months Ended December 27, 1998 Compared to Six Months Ended
December 28, 1997

     Consolidated  net loss for the six months ended December 27, 1998 was $48.6
million  compared to consolidated  net income of $13.2 million in the six months
ended  December 28, 1997. The results for the six months ended December 27, 1998
include the restructuring  charge,  non-recurring unusual items, and the gain on
the early  retirement of debt previously  discussed.  Excluding these items, the
net loss for the six  months  ended  December  27,  1998  would  have been $16.9
million,  and was  primarily a result of a decrease in product  revenues and the
corresponding   gross  margin,  as  well  as  increased  selling,   general  and
administrative  expenses,  partially  offset by increased  service  revenues and
services gross margin.

     Product  revenues:  Product revenues were $938.5 million for the six months
ended December 27, 1998 as compared to $1,044.7 million for the six months ended
December 28, 1997, a decrease of $106.2  million or 10.2%.  The revenue  decline
primarily reflects availability  constraints during the period and a slowdown in
orders from a number of significant customers as well as declining average sales
prices.

     Service  revenues:  Service revenues were $241.3 million for the six months
ended  December 27, 1998 as compared to $216.5  million for the six months ended
December 28, 1997, an increase of $24.8 million or 11.4%. The increase  reflects
increased demand from existing customers and the addition of new large accounts.
Service  revenues as a percentage  of total net revenues  increased to 20.5% for
the six months ended December 27, 1998 as compared to 17.2% in the six months




                                     Page 10

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
        Management's Discussion and Analysis of Financial Condition and
                             Results of Operations


ended December 28, 1997 due to higher service revenues coupled with a decline in
the product  business.  The Company is focused on continuing to increase service
revenues.

     Gross  margins:  Total gross  margins  declined to 11.4% for the six months
ended  December 27, 1998 as compared to 12.5% for the six months ended  December
28, 1997. Excluding the unusual charge,  product gross margin as a percentage of
product  revenues was 8.0% or $75.1 million for the current period,  as compared
to 10.3% or $107.6  million for the six months  ended  December  28,  1997.  The
decrease  reflects pricing  pressures,  product  availability  constraints and a
reduction in vendor  incentive  programs.  Including the  non-recurring  unusual
inventory charge previously  discussed,  product gross margin as a percentage of
product  revenues  declined to 7.6% or $71.1  million  for the six months  ended
December 27, 1998. Excluding the costs associated with the liquidation of excess
spare parts, previously discussed, services gross margin increased $14.2 million
or 28.6% to $63.9 million reflecting operating efficiencies on increased service
revenues.  Including these costs,  services gross margin increased $13.2 million
or 26.6% to $62.9 million.

Selling,   general   and   administrative   expenses:   Selling,   general   and
administrative expenses as a percentage of total revenues increased to 11.6% for
the six months  ended  December  27,  1998 from 10.0% in the same  period in the
previous year reflecting increased expenditures as well as lower sales volume in
the product  business.  For the six months ended  December  27,  1998,  selling,
general and  administrative  expenses were $137.2  million as compared to $125.1
million  for the six months  ended  December  28,  1997,  an  increase  of $12.1
million,  reflecting  increased  investments  in  company-wide   infrastructure,
training and field operations to support service business growth.

     Income (loss) from  operations:  Loss from operations was $30.5 million for
the six months ended December 27, 1998 as compared to income from  operations of
$32.2 million in the six months ended  December 28, 1997.  The loss reflects the
restructuring charge and non-recurring  unusual items, as well as the decline in
gross  margin  on  product   revenues  and   increased   selling,   general  and
administrative  expenses,  partially offset by increased gross margin on service
revenues.  Excluding the  restructuring  charge and unusual  items,  income from
operations for the six months ended December 27, 1998 was $1.8 million. See Note
2 to the condensed  consolidated  financial  statements for  additional  details
concerning the restructuring charge and unusual items.

     Interest expense,  net: Net interest expense remained essentially unchanged
for the six months  ended  December 27, 1998 as compared to the six months ended
December 28, 1997. This is a result of reduced borrowing rates, partially offset
by increased debt levels, compared to the year ago period.

     Other  income:  Other  income for the six months  ended  December 27, 1998,
represents a $575,000 gain on the early retirement of debt.

     Provisions  for income  taxes:  The Company  utilized  net  operating  loss
carryforwards to offset federal income tax requirements for the six months ended
December 28, 1997.

     Net income (loss): As a result of the factors mentioned above, net loss for
the six months  ended  December  27,  1998 was $48.6  million as compared to net
income of $13.2 million for the six months ended December 28, 1997.



                                     Page 11

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
        Management's Discussion and Analysis of Financial Condition and
                             Results of Operations



Liquidity and Capital Resources

     The Company has historically  financed its operations with borrowings under
various  credit lines.  Cash provided by operating  activities was $19.3 million
for the six months  ended  December 27, 1998  compared to $58.8  million for the
comparable period in 1997.

     The  decrease in cash  provided by  operations  during the six months ended
December  27,  1998  resulted   primarily  from  the  non-cash  portion  of  the
restructuring charge and unusual charges,  depreciation,  other non-cash charges
to income and from changes in operating assets and liabilities, partially offset
by the net loss of $48.6 million.

     Cash used in investing activities (capital  expenditures) was $11.5 million
during the six months ended  December 27, 1998 compared with $7.0 million during
the six months ended December 28, 1997.

     Cash used in financing  activities  was $2.4 million  during the six months
ended  December 27, 1998 compared to $52.9  million  during the six months ended
December 28, 1997.  During July 1998, the Company issued $100 million of 12 1/2%
Senior  Subordinated  Notes  due  2006.  The net  proceeds  were  used to  repay
outstanding  indebtedness  of the  Company,  resulting in an increase in working
capital of approximately $74 million.

     At December 27, 1998,  the Company had secured  credit lines  totaling $635
million,  with $405.3 million outstanding under these lines. An aggregate amount
of $319.6 million was outstanding under the IBMCC Working Capital Line of Credit
with IBM Credit  Corporation  ("IBMCC"),  of which  $213.8  million was interest
bearing.  In addition,  $85.7 million was  outstanding  under the line of credit
with Finova Capital Corporation, none of which was interest bearing.

     At December 27, 1998,  the Company had no material  commitments  other than
obligations  under  its  credit  facilities,  term  notes  and  operating  lease
facilities.

     The IBMCC Financing Agreement contains  restrictive  covenants with respect
to  maintenance  of minimum  tangible net worth,  current ratio and fixed charge
coverage. In addition,  the IBMCC Financing Agreement prohibits the Company from
paying  cash   dividends  on  common  stock.   In  December  1998,  the  Company
renegotiated the IBMCC Financing  Agreement  resulting in favorable revisions to
the financial  covenant  requirements and an increase in the financing rate from
LIBOR plus 2.10% to LIBOR plus 2.60%.  At December 27, 1998,  the Company was in
compliance  with all  financial  covenants and  maintained an excess  collateral
position.

     The Company  intends to continue  to finance a  significant  portion of its
working capital needs through credit  facilities.  The Company may seek to raise
additional  funds  through  public or private  equity or debt  financing or from
other sources to support the future growth of the business.  However,  there can
be no assurance that the Company will be able to raise such additional funding.






                                     Page 12

<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
        Management's Discussion and Analysis of Financial Condition and
                             Results of Operations



Recent Developments

     In January 1999, the Company filed a registration  statement on Form S-4 in
connection  with  its  offer  to  exchange  any and  all of its 12  1/2%  Senior
Subordinated  Notes  due  2006  (the  "Old  Notes")  with  its  12  1/2%  Senior
Subordinated Notes due 2006, which have been registered under the Securities Act
of 1933, as amended.

     In November  1998,  the Company  deposited  with the Trustee  under the Old
Notes funds to make the interest payment due February 1, 1999 on such notes.

     In November 1998, the Company's  Board of Directors  authorized  management
actions that resulted in the  reorganization  of ENTEX's  business to create two
operating  units:  a  Technology  Acquisition  Services  Division and a Services
Division,  each  functioning  as a  separate  operating  division  within  ENTEX
Information  Services.  The  reorganization  was  intended  to reduce  costs and
increase  operational focus to respond to new market dynamics.  As a result, the
Company  recorded  restructuring  and other  unusual  charges  during the second
fiscal quarter ended December 27, 1998. The restructuring  charge includes costs
related to severance in connection with a workforce reduction, as well as branch
office  consolidation  and  facilities  reductions.  See Note 2 to the Condensed
Consolidated Financial Statements.

Year 2000 Compliance
     The Company uses a  significant  number of computer  software  programs and
operating  systems in its internal  operations,  including  applications used in
financial  business systems and various  administration  functions.  As the Year
2000  approaches,  each of these computer systems may be affected in some way by
the rollover of the  two-digit  year value to 00. If these systems are unable to
properly  recognize  date sensitive  information  when the year changes to 2000,
they could  generate  erroneous  data or cause a system to fail.  The Company is
utilizing both internal and external resources to identify, correct or reprogram
and test the systems for Year 2000 compliance.

     ENTEX  classifies  its Year  2000  project  into  five  phases:  inventory,
assessment, renovation, validation and implementation.  Inventory is the process
in  which  all  electronic/computer  components  are  defined  for  all  systems
(information  technology  and  non-information  technology).  Assessment  is the
process  in  which  all  components  are  classified  as  either   compliant  or
non-compliant. Renovation is the process in which a system is upgraded, replaced
or  retired.  Validation  is the process in which  compliant  systems are tested
within  the  Company's  infrastructure  to  validate  that  either  the  initial
compliant  assessment  is  correct  or  the  upgrade  or  replacement  from  the
renovation   phase   is   compliant   within   the   Company's   infrastructure.
Implementation  is the process in which a compliant system is installed into the
Company's production environment and is utilized to support business operations.



                                     Page 13


<PAGE>

                        ENTEX INFORMATION SERVICES, INC.
        Management's Discussion and Analysis of Financial Condition and
                             Results of Operations


     The Company completed an inventory of its applications  systems in December
1997. More than 30 systems were identified, prioritized according to criticality
to business  operations,  and assessed for current compliance  status.  Based on
this review,  the Company has  scheduled  each system for either  renovation  or
validation. At June 30, 1998, the Company was in the process of implementing the
R3TM ERP from  SAP.  It was  anticipated  that the  implementation  of ERP would
address Year 2000 compliance in many of the systems  identified in the Company's
inventory.  The Company has now abandoned  implementation of ERP and written off
its investment of $10.7 million.  As a result, the Company has begun to renovate
existing  systems  identified  in the  inventory.  Assessments  have  also  been
completed  in the  processing  and  telecommunications  environments.  A similar
activity is now underway in the employee desktop  environment and is expected to
be completed by March 1999. As a result of these efforts, the Company intends to
implement any required changes or upgrades by June 1999. The Company's inventory
and assessment of its non-IT systems (facilities and warehouse-based,  including
scanners,  conveyers  and security  systems) is expected to be complete by April
1999, followed by any required renovation.  All validation and implementation of
these non-IT  systems is expected to be  completed by June 1999.  Total costs to
complete  the  Company's  Year  2000  project   upgrade  are  now  estimated  at
approximately  $7  million.  As of  December  27,  1998,  the  Company has spent
approximately $2.4 million.

     In addition to upgrading its own systems, the Company has contacted certain
significant  customers  and  suppliers to determine  their Year 2000  compliance
profile.  To date,  the Company has not  received  any  information  which would
indicate that the Year 2000 will result in any significant disruption from them.
The Company  currently  intends to complete joint testing of Year 2000 date data
with its EDI customers and suppliers by June 1999.

     All potential risks and  uncertainties  associated with the Year 2000 issue
can not be fully and accurately quantified.  Contingency plans will be developed
if third  party data  interchange  partners  fail  compliance  testing or if the
replacement or renovation of other existing systems is not on schedule. Although
the Company does not believe  that any  additional  costs or  potential  loss in
revenue  associated with Year 2000 compliance  initiatives  will have a material
adverse  effect  on the  Company's  business,  operating  results  or  financial
condition,  the Company is still  analyzing  its computer  systems,  and, to the
extent they are not fully year 2000  compliant,  there can be no assurance  that
the costs necessary to update software or potential systems  interruptions would
not have a material adverse effect on the Company's business,  operating results
and financial condition.













                                     Page 14

<PAGE>

                           PART II - OTHER INFORMATION


            Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

                       (a)      Exhibits required by Item 601 of Regulation S-K.

                                (27)     Financial Data Schedule.


                       (b)       ENTEX   filed  a  report  on  Form  8-K  dated
                                 December   23,   1998  under  Item  5,  "Other
                                 Events", and Item 7, "Financial Statements and
                                 Exhibits."   No  financial   statements   were
                                 included with this report.




































                                     Page 15


<PAGE>

                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
         the  registrant  has duly caused this report to be signed on its behalf
         by the undersigned hereunto duly authorized.




                                             ENTEX Information Services, Inc.
                                                       (Registrant)



         February 10, 1999                    Michael G. Archambault
                                              Michael G. Archambault
                                              Senior Vice President, CFO
                                              and Treasurer



         February 10, 1999                    Shirley S. Mehta
                                              Shirley S. Mehta
                                              Vice President and Controller























                                     Page 16