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

                          -----------------------------

                  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
              ---      OF THE SECURITIES EXCHANGE ACT OF 1934


                                       OR

               X  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
              ---      OF THE SECURITIES EXCHANGE ACT OF 1934
    For the transition period from October 1, 1997 to December 31, 1997

                          -----------------------------

                          Commission file number 1-9397

                          -----------------------------

                            BAKER HUGHES INCORPORATED
             (Exact name of registrant as specified in its charter)


             Delaware                                         76-0207995
(State or other jurisdiction                             (I.R.S. Employer
 of incorporation or organization)                      Identification No.)
 3900 Essex Lane, Houston, Texas                                77027
(Address of principal executive offices)                      (Zip code)

    Registrant's telephone number, including area code:  (713) 439-8600

                          -----------------------------

    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 Exchange Act 
of 1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.  Yes  X   No
                                                    ---     ---

    Indicate the number of shares outstanding of each of the issuer's 
classes of common stock, as of the latest practicable date.


              Class                          Outstanding at August 29, 1998
              -----                          ------------------------------

Common Stock, $1.00 par value per share            325,791,000 shares



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                         BAKER HUGHES INCORPORATED


                                   INDEX


                                                                       Page
                                                                        No.
                                                                       ----
Part I - Financial Information:


    Consolidated Condensed Statements of Operations - Three Months
         ended December 31, 1997 and 1996                                2

    Consolidated Condensed Statements of Financial Position
         - December 31, 1997 and September 30, 1997                      3

    Consolidated Condensed Statements of Cash Flows - Three months
         ended December 31, 1997 and 1996                                4

    Notes to Consolidated Condensed Financial Statements                 5

    Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                           9


Part II - Other Information                                             17































                                    -1-
                         PART I.  FINANCIAL INFORMATION
                            BAKER HUGHES INCORPORATED
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                      (In millions, except per share amounts)


                                                        Three Months Ended
                                                           December 31,
                                                          1997       1996
REVENUES:                                             ---------  ---------
  Sales                                              $    773.4 $    551.7
  Services and rentals                                    360.0      275.0
                                                      ---------  ---------
    Total revenues                                      1,133.4      826.7
                                                      ---------  ---------
COSTS AND EXPENSES:
  Cost of sales                                           477.5      348.1
  Cost of services and rentals                            197.4      157.6
  Selling, general and administrative                     306.4      217.1
  Amortization of goodwill and other intangibles           10.3        7.6
                                                      ---------  ---------
    Total costs and expenses                              991.6      730.4
                                                      ---------  ---------
Operating income                                          141.8       96.3
Interest expense                                          (14.5)     (11.8)
Interest income                                              .7         .5
                                                      ---------  ---------
Income before income taxes and cumulative effect of
  accounting change                                       128.0       85.0
Income taxes                                              (48.6)     (33.5)
                                                      ---------  ---------
Income before cumulative effect of accounting change       79.4       51.5
Cumulative effect of accounting change -
  Impairment of long-lived assets to be disposed of
    (net of $6.0 income tax benefit)                                 (12.1)
                                                      ---------  ---------
Net income                                           $     79.4 $     39.4
                                                      =========  =========
Earnings Per share of Common Stock - Basic:
  Income before cumulative effect of accounting
    change                                           $      .47 $      .35
  Cumulative effect of accounting change                              (.08)
                                                      ---------  ---------
  Net income                                         $      .47 $      .27
                                                      =========  =========

Earnings Per Share of Common Stock - Diluted:
  Income before cumulative effect of accounting
    change                                           $      .46 $      .34
  Cumulative effect of accounting change                              (.08)
                                                      ---------  ---------
  Net income                                         $      .46 $      .26
                                                      =========  =========

Cash dividends per share of common stock             $     .115 $     .115
                                                      =========  =========

   See accompanying notes to consolidated condensed financial statements.

                                    -2-
                         BAKER HUGHES INCORPORATED
          CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
                              (In millions)

                                  ASSETS
                                                 December 31, September 30,
                                                     1997          1997
Current Assets:                                   ----------    ----------
  Cash and cash equivalents                      $       8.4   $       8.6
  Receivables - net                                  1,074.0       1,047.1
  Inventories                                        1,105.6       1,030.5
  Deferred income taxes                                 79.8          83.8
  Other current assets                                  59.5          50.5
                                                  ----------    ----------
    Total current assets                             2,327.3       2,220.5
Property - net                                       1,049.5         982.9
Other assets                                           476.3         497.5
Excess costs arising from acquisitions - net         1,052.3       1,055.4
                                                  ----------    ----------
    Total assets                                 $   4,905.4   $   4,756.3
                                                  ==========    ==========

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                               $     458.0    $    499.7
  Short-term borrowings and current portion
    of long-term debt                                   70.8           9.6
  Accrued employee compensation and benefits           175.9         223.2
  Income taxes payable                                  45.7          48.6
  Other accrued liabilities                            188.5         155.2
                                                  ----------    ----------
    Total current liabilities                          938.9         936.3
                                                  ----------    ----------
Long-term debt                                         909.2         771.8
                                                  ----------    ----------
Deferred income taxes                                  261.8         275.9
                                                  ----------    ----------
Other long-term liabilities                            163.4         167.7
                                                  ----------    ----------
Stockholders' Equity:
  Common stock                                         169.4         169.1
  Capital in excess of par value                     2,241.5       2,236.0
  Retained earnings                                    343.6         283.7
  Cumulative foreign currency translation
    adjustment                                        (160.5)       (144.9)
  Unrealized gain on securities available for sale      38.1          60.7
                                                  ----------    ----------
    Total stockholders' equity                       2,632.1       2,604.6
                                                  ----------    ----------
    Total liabilities and stockholders' equity   $   4,905.4   $   4,756.3
                                                  ==========    ==========

   See accompanying notes to consolidated condensed financial statements.





                                    -3-
                            BAKER HUGHES INCORPORATED
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (In millions)

                                                      Three Months Ended
                                                         December 31,
                                                      1997          1996
                                                    --------      --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                         $    79.4     $    39.4
Adjustments to reconcile net income to net cash
  flows from operating activities:
    Depreciation and amortization of:
      Property                                          45.1          32.4
      Other assets and debt discount                    12.8          10.0
    Deferred income taxes                                3.5           7.2
    Gain on disposal of assets                          (9.7)         (7.0)
    Foreign currency translation gain - net             (2.0)
    Cumulative effect of accounting change                            12.1
    Change in receivables                              (21.0)        (11.2)
    Change in inventories                              (59.3)        (40.8)
    Change in accounts payable                         (47.6)        (35.2)
    Changes in other assets and liabilities            (61.1)        (10.0)
                                                    --------      --------
Net cash flows from operating activities               (59.9)         (3.1)
                                                    --------      --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Property additions                                  (105.2)        (54.7)
  Proceeds from disposal of assets                      17.5          13.3
  Cash obtained in stock acquisition                                   3.3
  Acquisition of business, net of cash acquired        (33.1)
                                                    --------      --------
Net cash flows from investing activities              (120.8)        (38.1)
                                                    --------      --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net borrowings from commercial paper and
    revolving credit facilities                        195.9          56.3
  Proceeds from exercise of stock options                5.6          12.6
  Dividends                                            (19.5)        (16.7)
                                                    --------      --------
Net cash flows from financing activities               182.0          52.2
                                                    --------      --------
Effect of exchange rate changes on cash                 (1.5)           .2
                                                    --------      --------
(Decrease)increase in cash and cash equivalents          (.2)         11.2
Cash and cash equivalents, beginning of period           8.6           7.7
                                                    --------      --------
Cash and cash equivalents, end of period           $     8.4     $    18.9
                                                    ========      ========

Income taxes paid                                  $    48.0     $    12.9
Interest paid                                      $     8.8     $     6.6

   See accompanying notes to consolidated condensed financial statements.





                                    -4-
                         BAKER HUGHES INCORPORATED

            NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


Note 1. General

    In the opinion of Baker Hughes Incorporated (the "Company" or "Baker 
Hughes"), the unaudited consolidated condensed financial statements include 
all adjustments consisting of normal recurring accruals necessary for a 
fair presentation of the Company's consolidated financial position as of 
December 31, 1997 and its consolidated results of operations and cash flows 
for each of the three month periods ended December 31, 1997 and 1996.  
Although the Company believes that the disclosures in these financial 
statements are adequate to make the information presented not misleading, 
certain information and footnote disclosures normally included in annual 
financial statements prepared in accordance with generally accepted 
accounting principles have been condensed or omitted pursuant to the rules 
and regulations of the Securities and Exchange Commission (see the 
Company's Annual Report on Form 10-K for the year ended September 30, 1997 
for the most recent annual financial statements prepared in accordance with 
generally accepted accounting principles).  The results of operations for 
the three months ended December 31, 1997 are not necessarily indicative of 
the results to be expected for the full year.  In the Notes to Consolidated 
Condensed Financial Statements, all dollar and share amounts in tabulations 
are in millions of dollars and shares, respectively, unless otherwise 
indicated.

Note 2. Change in Fiscal Year

    On August 27, 1998, the Board of Directors of the Company approved a 
change in the Company's fiscal year end from September 30 to December 31, 
effective the calendar year beginning January 1, 1998.  A three-month 
transition period from October 1, 1997 through December 31, 1997 will 
precede the start of the new fiscal year.

Note 3. Inventories

    Inventories are comprised of the following:

                              December 31,       September 30,
                                 1997                 1997
                              -----------        ------------
Finished goods                $     907.2         $     832.3
Work in process                     122.2                98.3
Raw materials                        76.2                99.9
                               ----------          ----------
    Total                     $   1,105.6         $   1,030.5
                               ==========          ==========

Note 4. Acquisition

    On October 24, 1997, the Company acquired Oil Dynamics, Inc. ("ODI") 
from Franklin Electric Co. Inc. for $34.4 million.  ODI is a manufacturer 
of electric submersible pumps used to lift crude oil in producing regions 
worldwide and has been added to the operations of Centrilift.



                                    -5-
                         BAKER HUGHES INCORPORATED

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS CONTINUED


    The acquisition was accounted for using the purchase method of 
accounting.  Accordingly, the cost of the acquisition has been allocated to 
assets acquired and liabilities assumed based on their estimated fair 
market values at the date of acquisition, October 24, 1997.  The operating 
results of ODI are included in the consolidated condensed statement of 
operations from the acquisition date.  Pro forma results of the acquisition 
have not been presented as the pro forma revenue, income before accounting 
change and earnings per share would not be materially different from the 
Company's actual results.

Note 5. Income Per Common Share

    The Company adopted Statement of Financial Accounting Standards 
("SFAS") No. 128, "Earnings per Share," which establishes new standards for 
computing and presenting earnings per share ("EPS"), in the quarter ended 
December 31, 1997.

    Reconciliation of the numerators and denominators of the basic and 
diluted EPS computations is as follows:

                     For the Three Months Ended  For the Three Months Ended
                        December 31, 1997           December 31, 1996
                       Income        Shares        Income        Shares
                     (Numerator)  (Denominator)  (Numerator)  (Denominator)
                      ---------    -----------    ---------    -----------
Basic EPS               $79.4         169.3         $39.4         147.6
Effect of dilutive
  securities:
    Stock plans                         1.5                         1.4
    Liquid Yield
      Option Notes        1.7           7.2           1.6           7.2
                         ----         -----          ----         -----
Diluted EPS             $81.1         178.0         $41.0         156.2
                         ====         =====          ====         =====

    Options to purchase 3.2 million shares of common stock were not 
included in the computation of diluted EPS because the options' exercise 
price of $47.81 was greater than the average market price of the Company's 
common stock during the quarter.















                                    -6-
                         BAKER HUGHES INCORPORATED

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS CONTINUED


Note 6. Segment Information

    Summarized financial information concerning the Company's reportable 
segments is shown in the following table:

Three Months Ended                             Process
December 31, 1997      Oilfield   Chemicals   Equipment    Other     Total
------------------     --------   ---------   ---------  --------  --------
Revenues               $  827.8   $  176.6    $  124.1   $    4.9  $1,133.4
Segment profit(loss)      128.0       20.5         9.0      (29.5)    128.0
Total assets            3,175.1      997.3       378.6      354.4   4,905.4

Three Months Ended
December 31, 1996
------------------
Revenues               $  652.9   $   76.7    $   90.2   $    6.9  $  826.7
Segment profit(loss)       92.3        6.0         6.9      (20.2)     85.0
Total assets            2,601.0      294.9       253.5      295.2   3,444.6

    The following table presents the details of "Other" segment profit 
(loss):

                                   Three Months Ended
                                      December 31,
                                    1997       1996
                                   ------     ------
Corporate expenses                 $(15.8)    $ (9.7)
Interest expense - net              (13.8)     (11.3)
Other                                  .1         .8
                                   ------     ------
    Total                          $(29.5)    $(20.2)
                                   ======     ======

Note 7. Subsequent Event

    On August 10, 1998, Baker Hughes completed the merger with Western 
Atlas Inc. ("Western Atlas").  Under the terms of the merger agreement, 
each outstanding share of Western Atlas common stock has been converted 
into the right to receive 2.7 shares of Baker Hughes common stock.  In the 
aggregate, Baker Hughes issued approximately 148.6 million shares of Baker 
Hughes common stock to Western Atlas shareholders.  In addition, as part of 
the merger, Baker Hughes issued 5.4 million shares of Baker Hughes common 
stock in exchange for certain rights relating to Western Atlas employee 
stock options.

    Western Atlas, the common stock of which was previously publicly 
traded, is a leading supplier of oilfield services and reservoir 
information technologies for the worldwide oil and gas industry.  It 
specializes in land, marine and transition-zone seismic data acquisition 
and processing services; well-logging and completion services; and 
reservoir characterization and project management services.



                                    -7-
                         BAKER HUGHES INCORPORATED

      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS CONTINUED


    The following table sets forth certain unaudited pro forma condensed 
combined financial information for Baker Hughes giving effect to the merger 
with Western Atlas accounted for as a pooling of interests.

                                                         Three Months Ended
                                                            December 31,
                                                          1997       1996
                                                        --------   --------
Revenues                                                $1,572.9   $1,210.7
Income from continuing
  operations before accounting change                      111.2       70.3
Net income                                                 114.0       76.0
Income from continuing
  operations before accounting change per share:
    Basic                                                    .35        .24
    Diluted                                                  .34        .24
Net income per share:
    Basic                                                    .36        .26
    Diluted                                                  .35        .26

                                                          December 31, 1997
                                                          -----------------
Current assets                                                 $2,919.8
Current liabilities                                             1,417.2
Total assets                                                    7,236.1
Long-term debt                                                  1,610.7
Stockholders' equity                                            3,519.0

    In May 1997, the Western Atlas Board of Directors approved, in 
principle, a plan to distribute (the "Spin-off") to Western Atlas 
shareholders all of the outstanding common stock of UNOVA, Inc. ("UNOVA"), 
a wholly owned subsidiary of Western Atlas.  In connection with the Spin-
off, the consolidated financial statements of Western Atlas were restated 
to present the operations of UNOVA as discontinued operations.




















                                    -8-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                         AND RESULTS OF OPERATIONS


    Management's Discussion and Analysis of Financial Condition and Results 
of Operations ("MD&A") should be read in conjunction with the Company's 
Consolidated Condensed Financial Statements and the related notes thereto.

FORWARD-LOOKING STATEMENTS

    MD&A includes forward-looking statements within the meaning of Section 
27A of the Securities Act of 1933, as amended, and Section 21E of the 
Securities Exchange Act of 1934, as amended.  The words "anticipate," 
"believe," "expect," "plan," "intend," "estimate," "project," "forecasts," 
"will," "could," "targeted," "quantified," "may" and similar expressions 
are intended to identify forward-looking statements.  No assurance can be 
given that actual results may not differ materially from those in the 
forward-looking statements herein for reasons including the effect of 
competition, the level of petroleum industry exploration and production 
expenditures, world economic conditions, prices of, and the demand for, 
crude oil and natural gas, drilling activity, weather, the legislative 
environment in the United States and other countries, OPEC policy, conflict 
in the Middle East and other major petroleum producing or consuming 
regions, the development of technology that lowers overall finding and 
development costs and the condition of the capital and equity markets.

BUSINESS ENVIRONMENT

Oilfield

    Oilfield Operations generated 73% of the Company's consolidated 
revenues for the three months ended December 31, 1997.  Oilfield Operations 
consisted of five business units - Baker Hughes INTEQ, Baker Hughes 
Solutions, Baker Oil Tools, Centrilift and Hughes Christensen - that 
provide products, services and solutions used in the drilling, completion, 
production and maintenance of oil and gas wells.  The business environment 
for Oilfield Operations and its corresponding operating results are 
affected significantly by petroleum industry exploration and production 
expenditures.  These expenditures are influenced strongly by oil company 
expectations about the supply and demand for crude oil and natural gas, 
energy prices and finding and development costs.  Petroleum supply and 
demand, pricing and finding and development costs, in turn, are influenced 
by numerous factors including, but not limited to, those described above in 
"--Forward-Looking Statements".

    Four key factors which currently influence the worldwide crude oil 
market and therefore current and future expenditures for exploration and 
development by our customers are:

    1) The degree to which certain large producing countries, in particular 
Saudi Arabia, Venezuela, and Mexico, are willing and able to restrict 
production and exports of crude oil.

    2) The increasing rate of depletion of known hydrocarbon reserves.  
Technological advances are resulting in accelerated decline rates and 
shorter well lives.  In general, accelerated decline rates require 
additional customer spending to hold production level.

                                    -9-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


    3) The economic growth in certain key areas of the world, particularly 
developing Asia, where the linkage between energy demand and economic 
growth is particularly strong.

    4) The amount of crude oil in storage relative to historic levels.

    These four factors, together with oil and gas company projections for 
future energy price movement, influence overall levels of expenditures for 
exploration and development by our customers.

    More specifically, two key factors influence the level of exploration 
and development spending:

    1) Technology:  Advances in the design and application of the Company's 
products and services allow oil and gas companies to drill fewer wells, 
place the wells they drill more precisely in the higher yielding or more 
easily produced hydrocarbon zones of the reservoir and allow operators to 
drill, complete and operate wells at lower overall costs.

    2) Price Volatility:  Changes in hydrocarbon markets create uncertainty 
in the future price of hydrocarbons and therefore create uncertainty about 
the aggregate level of customer spending.  Multi-year projects, such as 
deep-water exploration and drilling, are the least likely to be impacted by 
price volatility.  Projects with relatively short payback periods or low 
profit margins, such as workover activity or the extraction of heavy oil, 
are more likely to be impacted.

    Crude oil and natural gas prices and the Baker Hughes rotary rig count 
are summarized in the tables below as quarterly averages followed by the 
Company's outlook.  While reading the Company's outlook set forth below, 
caution is advised that the factors described above in "--Forward-Looking 
Statements" and "--Business Environment" could negatively impact the 
Company's expectations for oil demand, oil and gas prices and drilling 
activity.

Oil and Gas Prices

Three Months Ended December 31,                         1997        1996
-------------------------------------------------------------------------
WTI ($/bbl)                                            20.02       24.67
U.S. Spot Natural Gas ($/mcf)                           2.72        2.96

    Crude oil prices experienced downward pressure due to increased supply 
from renewed Iraqi exports, increased OPEC production, higher inventories 
(particularly in North America) and a simultaneous slowing of demand growth 
due to the Asian economic downturn.

    U.S. natural gas prices remained strong during most of the quarter 
ended December 31, 1997, averaging above $2.00 per mcf, reflecting 
relatively tight supply and demand conditions in North America.  Since June 
30, 1998, gas prices have averaged below $2.00 per mcf which could impact 
natural gas drilling.


                                    -10-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


Rotary Rig Count

Three Months Ended December 31,                         1997        1996
-------------------------------------------------------------------------
U.S. - Land                                              873         736
U.S. - Offshore                                          125         109
Canada                                                   448         318
-------------------------------------------------------------------------
    North America                                      1,446       1,163
-------------------------------------------------------------------------
Latin America                                            280         281
North Sea                                                 55          54
Other Europe                                              56          62
Africa                                                    75          82
Middle East                                              165         138
Asia Pacific                                             173         181
-------------------------------------------------------------------------
    International                                        804         798
-------------------------------------------------------------------------
Worldwide                                              2,250       1,961
-------------------------------------------------------------------------
U.S. Workover                                          1,427       1,352

Outlook

    The Company expects oil prices to trade between $12.00 and $15.50 per 
barrel for the remainder of 1998 as production cuts balance the impact of 
weakened demand and inventories stabilize.  The Company believes that a 
sustained low price environment for crude oil may result in a period of 
slower than expected customer spending through the end of 1998 and into 
1999.  In 1999, the willingness and ability by certain countries, 
particularly Saudi Arabia, Venezuela and Mexico, to restrict production and 
exports, as well as increasing depletion rates, could result in inventories 
that approach normal levels and ultimately rising oil prices.  In the long-
term, the economic rebound of developing Asia is expected to result in 
demand growth approximating the long-term trend of 2 to 2-1/2% per year.

    North America:  The Company anticipates that North American activity 
will continue to decline through the remainder of the year relative to the 
prior year.  Offshore activity is expected to weaken temporarily as high 
day-rate rigs are recontracted at lower rates.

    International:  The Company expects that activity in Latin America will 
decrease over the remainder of the year as budget cuts in Mexico and 
Venezuela impact activity levels.  Eastern Hemisphere activity is expected 
to weaken if oil prices remain at current depressed levels.

Chemicals

    Baker Petrolite generated 16% of the Company's consolidated revenues 
for the three months ended December 31, 1997.  Baker Petrolite is the sole 
business unit reported in this segment and is the result of combining Baker 


                                    -11-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


Performance Chemicals Incorporated, previously reported in the oilfield 
segment, and Petrolite Corporation ("Petrolite"), acquired in July, 1997.

    Operating in all major oil and gas producing regions of the world, 
Baker Petrolite manufactures specialty chemicals for inclusion in the sale 
of integrated chemical technology solutions for petroleum production, 
transportation and refining.  In addition to those business environment 
factors discussed above for the oilfield segment, the business environment 
for the chemicals segment is significantly influenced by the trend of 
continued reduction in the total operating cost of the customer base, which 
includes major multi-national, independent and national or state-owned oil 
companies.  Improvements in chemical technology and its application, as 
well as the expanded use of alliance relationships, enable Baker Petrolite 
to reduce overall production, transportation and refining costs.

    Baker Petrolite also provides chemical technology solutions to other 
industrial markets throughout the world including petrochemicals, steel, 
fuel additives, plastics, imaging and adhesives.  The business environments 
for these markets are individually unique but most are influenced by the 
general level of gross domestic product.

Process Equipment

    Process Equipment generated 11% of the Company's consolidated revenues 
for the three months ended December 31, 1997.  Process Equipment consisted 
of four business units - EIMCO Process Equipment, Bird Machine Company, 
Baker Hughes Process Systems and Baker Hughes Industrial Services - that 
provide technologies that separate solids from liquids and liquids from 
liquids through filtration, sedimentation, centrifugation and flotation 
processes.  The business environment for Process Equipment and its 
corresponding operating results are affected significantly by spending on 
large capital projects in the pulp and paper, oil and gas, industrial, 
refining, chemical and municipal wastewater treatment markets.  Spending on 
capital projects is influenced by numerous factors including, but not 
limited to, commodity price cycles, especially copper and pulp, oil and 
gas, the supply and demand for refined products and chemicals, the 
expanding Asian populations and economies, as well as environmental 
pressures and legislation.  Process Equipment anticipates a decrease in 
capital project activity for the remainder of 1998 due to delays in 
customers' capital spending.  These delays are a result of the unstable 
economic conditions in Asia and a general weakness in most of the markets 
Process Equipment serves.

ACQUISITIONS

Oil Dynamics, Inc.

    On October 24, 1997, the Company acquired Oil Dynamics, Inc. ("ODI") 
from Franklin Electric Co. Inc.  ODI is a manufacturer of electric 
submersible pumps used to lift crude oil in producing regions worldwide and 
will be added to the operations of Centrilift.  The purchase price was 
$34.4 million.


                                    -12-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


RESULTS OF OPERATIONS

Revenues

    Consolidated revenues for the three months ended December 31, 1997 were 
$1,133.4 million, an increase of 37% over revenues of $826.7 million for 
the three months ended December 31, 1996.  Sales revenues were up $221.7 
million, an increase of 40%, and service and rentals revenues were up $85.0 
million, an increase of 31%, in each case, over the same three months in 
1996.  Approximately 64% of the Company's consolidated revenues in the 
three months ended December 31, 1997 were derived from international 
activities.

    Oilfield Operations reported revenues for the three months ended 
December 31, 1997 of $827.8 million, an increase of 27% over revenues of 
$652.9 million for the three months ended December 31, 1996.  Revenue 
growth outpaced rig count increases in most areas of the world.  In 
particular, revenues in Venezuela increased 68% as that country continued 
to work towards its then stated goal of significantly increasing 
production.

    Baker Petrolite revenues increased to $176.6 million for the three 
months ended December 31, 1997 compared to $76.7 million for the three 
months ended December 31, 1996 due to the Petrolite acquisition in July 
1997.

    Process Equipment revenues were $124.1 million for the three months 
ended December 31, 1997, an increase of 38% over the three months ended 
December 31, 1996.  Excluding revenues from 1997 acquisitions of $42.5 
million, revenues for the three months ended December 31, 1997 declined 
9.5% due primarily to the decline in copper prices driven by the economic 
problems in Asia resulting in delays in customers' capital spending.

Costs and Expenses Applicable to Revenues

    Cost of sales and cost of services and rentals increased in the three 
months ended December 31, 1997 from the same period in 1996 consistent with 
the related revenue increases.  Gross margin percentages increased from 
38.8% for the three months ended December 31, 1996 to 40.5% for the three 
months ended December 31, 1997.

Selling, General and Administrative

    Selling, general and administrative ("SG&A") expense increased $89.3 
million for the three months ended December 31, 1997 compared to the same 
period in 1996.  As a percent of consolidated revenues, SG&A expense was 
27.0% and 26.3% for the three months ended December 31, 1997 and 1996, 
respectively.

    Excluding the impact of acquisitions, the Company added approximately 
3,700 employees during the three months ended December 31, 1997, a 22% 
increase in headcount over the same period in 1996, to keep pace with the 


                                    -13-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


increased activity levels.  As a result, employee training and development 
efforts increased compared to the same period in 1996.

Amortization Expense

    Amortization expense for the three months ended December 31, 1997 
increased $2.7 million from the three months ended December 31, 1996 due to 
the Petrolite acquisition.

Interest Expense

    Interest expense for the three months ended December 31, 1997 increased 
$2.7 million compared to the same period in 1996 due to higher debt levels 
during the three months ended December 31, 1997 as compared to the same 
period in 1996.

Income Taxes

    The effective income tax rate for the three months ended December 31, 
1997 was 38.0%, down from 39.5% for the three months ended December 31, 
1996 due primarily to a change in the mix of foreign earnings and the fixed 
nature of the nondeductible goodwill amortization.

CAPITAL RESOURCES AND LIQUIDITY

Financing Activities

    Net cash inflows from financing activities were $182.0 million for the 
three months ended December 31, 1997 compared to $52.2 million for the same 
period in 1996.  The change from the 1996 period was due to increased 
borrowings to fund higher working capital levels, higher capital spending 
and the ODI acquisition.

    Total debt outstanding at December 31, 1997 was $980.0 million, 
compared to $781.4 million at September 30, 1997.  The debt to equity ratio 
was .37 at December 31, 1997, compared to .30 at September 30, 1997.

    Cash dividends increased for the three months ended December 31, 1997 
compared to the three months ended December 31, 1996 due to an increase in 
the number of shares of common stock outstanding primarily resulting from 
shares issued in connection with the Petrolite and Drilex International 
Inc. acquisitions in July 1997.

    At December 31, 1997, the Company had $644.9 million of credit 
facilities with commercial banks, of which $300.0 million was committed.  
These facilities are subject to normal banking terms and conditions and do 
not materially restrict the Company's activities.

Investing Activities

    Net cash outflows from investing activities were $120.8 million for the 
three months ended December 31, 1997 compared to cash outflows of $38.1 
million for the three months ended December 31, 1996.

                                    -14-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


    Property additions increased significantly during the three months 
ended December 31, 1997 to $105.2 million compared to $54.7 million for the 
three months ended December 31, 1996 as the Company added capacity to meet 
the increased market demand.  The majority of the capital expenditures were 
in Oilfield Operations where expenditures for rental tools and machinery 
and equipment accounted for 31% and 47% of total capital expenditures for 
the three months ended December 31, 1997. In light of the recent activity 
decline, the Company is reviewing significant capital projects and expects 
the rate of capital spending to slow.  Funds provided from operations and 
outstanding lines of credit are expected to be more than adequate to meet 
future capital expenditure requirements.

    The Company used short term borrowings to purchase ODI in October 1997 
for a purchase price, net of cash acquired, of $33.1 million.  The Company 
obtained $3.3 million of cash from the stock for stock acquisition of 
Drilex in 1997.

Operating Activities

    Net cash outflows from operating activities were $59.9 million and $3.1 
million for the three months ended December 31, 1997 and 1996, 
respectively.  The primary use of cash by operating activities was to fund 
increases in working capital due to increased levels of activity.

ACCOUNTING STANDARDS

Impairment of Long-Lived Assets

    The Company adopted SFAS No. 121, Accounting for the Impairment of 
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, effective 
October 1, 1996.  The statement sets forth guidance as to when to recognize 
an impairment of long-lived assets, including goodwill, and how to measure 
such an impairment.  The methodology set forth in SFAS No. 121 is not 
significantly different from the Company's current policy and, therefore, 
the adoption of SFAS No. 121 does not have a significant impact on the 
consolidated financial statements, as it relates to impairment of long-
lived assets used in operations.  However, SFAS No. 121 also addresses the 
accounting for long-lived assets to be disposed of and requires these 
assets to be carried at the lower of cost or fair market value, rather than 
the lower of cost or net realizable value, the method that was previously 
used by the Company.  The Company recognized a charge to income of $12.1 
million ($.08 per share), net of a tax benefit of $6.0 million, as the 
cumulative effect of a change in accounting during the three months ended 
December 31, 1996.

Comprehensive Income

    In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive 
Income, which for the Company is effective in the year ending December 31, 
1998.  SFAS No. 130 establishes standards for the reporting and displaying 
of comprehensive income and its components.  The Company will be analyzing 
SFAS No. 130 during 1998 to determine what, if any, additional disclosures 
will be required.

                                    -15-
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

                    AND RESULTS OF OPERATIONS CONTINUED


YEAR 2000 ISSUE

    The Year 2000 issue is the result of computer programs that use only 
two digits to identify a year rather than four.  If not corrected, computer 
applications could fail or create erroneous results before, during and 
after the Year 2000.

    The Company is currently assessing the cost and uncertainties related 
to the Year 2000 issue using internal and external resources.  Based on 
preliminary information, the Company currently believes that with certain 
modifications, upgrades and, in some instances, converting to new software, 
the Company will have substantially addressed the Year 2000 issues with 
respect to its software, hardware and products without significant impact 
on its operating systems.  The estimated costs for the Company to 
substantially address these Year 2000 issues are not expected to be 
material to the Company's financial position, results of operations or 
liquidity.  Additionally, the Company is not aware of Year 2000 issues of 
its customers or suppliers that would be material to the Company's 
financial position, results of operations or liquidity.

MERGER WITH WESTERN ATLAS

    On August 10, 1998, Baker Hughes completed the merger with Western 
Atlas Inc. ("Western Atlas").  Under the terms of the merger agreement, 
each outstanding share of Western Atlas common stock has been converted 
into the right to receive 2.7 shares of Baker Hughes common stock.  In the 
aggregate, Baker Hughes issued approximately 148.6 million shares of Baker 
Hughes common stock to Western Atlas shareholders.  In addition, as part of 
the merger, Baker Hughes issued 5.4 million shares of Baker Hughes common 
stock in exchange for certain rights relating to Western Atlas employee 
stock options.

    Western Atlas, the common stock of which was previously publicly 
traded, is a leading supplier of oilfield services and reservoir 
information technologies for the worldwide oil and gas industry.  It 
specializes in land, marine and transition-zone seismic data acquisition 
and processing services; well-logging and completion services; and 
reservoir characterization and project management services.
















                                    -16-
                          PART II. OTHER INFORMATION


Item 1. Legal Proceedings

    None.

Item 4. Submission of Matters to a Vote of Security Holders

    None.

Item 6. Exhibits and Reports on Form 8-K

    (a)  Exhibits:

         (27) Financial Data Schedule

    (b)  Reports on Form 8-K:

         None.







































                                    -17-
                                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 thereunto duly authorized.




                                       BAKER HUGHES INCORPORATED
                                             (Registrant)




Date:  October 5, 1998                 By  /s/LAWRENCE O'DONNELL, III
                                       ------------------------------------
                                         Vice President and General Counsel





Date:  October 5, 1998                 By  /s/JAMES E. BRAUN
                                       ------------------------------------
                                         Vice President and Controller































                                    -18-