SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C. 20549

                              FORM 10-Q

[ X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
        SECURITIES EXCHANGE ACT OF 1934.

        FOR THE QUARTERLY PERIOD ENDED   May 3, 1997  .

                           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 0-15991
 
                     Intelligent Electronics, Inc.
                     -----------------------------
      (Exact name of registrant as specified in its charter)

            Pennsylvania                           23-2208404    
   -----------------------------------       --------------------
   (State or other jurisdiction of              (IRS Employer
    incorporation or organization)            Identification No.)

           411 Eagleview Boulevard, Exton, PA          19341   
         ----------------------------------------------------  
        (Address of principal executive offices)    (Zip Code)

                           (610) 458-5500 
                          ----------------
      (Registrant's telephone number, including area code)

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: 39,166,814 shares of 
Common Stock, par value $0.01 per share were outstanding at June 9, 1997.

PAGE
<PAGE>

               Intelligent Electronics, Inc. and Subsidiaries

                                  INDEX

                                                                     Page No.
                                                                     --------

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements


          Consolidated Balance Sheets

             May 3, 1997 and February 1, 1997                             3


          Consolidated Statements of Operations 

             Three Months Ended May 3, 1997 and May 4, 1996               4


          Consolidated Statements of Cash Flows 

             Three Months Ended May 3, 1997 and May 4, 1996               5


          Notes to Consolidated Financial Statements                      6


Item 2.   Management's Discussion and Analysis of Financial Condition  
          and Results of Operations                                       9


PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                               12


SIGNATURES                                                               13




PAGE
<PAGE>
PART I -  FINANCIAL INFORMATION                                   FORM 10-Q

                  INTELLIGENT ELECTRONICS, INC. and Subsidiaries           
   
                          Consolidated Balance Sheets              
                    (in thousands, except share-related data)              
<TABLE>
<CAPTION>
                                                              May 3,     February 1,
                                                               1997         1997
                                                            -----------  -----------
                                                            (unaudited)      
                                    Assets        
Current assets: 
  <S>                                                        <C>          <C>
  Cash and cash equivalents                                  $  37,997    $  42,881
  Accounts receivable, net                                     139,673      149,107  
  Inventory                                                    240,228      311,669  
  Prepaid expenses and other current assets                      4,240        4,834  
  Deferred income taxes                                         11,861       11,861  
                                                             ----------   ----------
   Total current assets                                        433,999      520,352  
                
Property and equipment, net                                     58,409       58,712  
Intangible assets, primarily goodwill, net                      90,653       91,914  
Other assets                                                    27,799       28,103  
                                                             ----------   ----------
     Total assets                                            $ 610,860    $ 699,081  
                                                             ==========   ==========
 
                      Liabilities and Shareholders' Equity          

Current liabilities:              
  Short-term debt                                            $  34,135    $   3,486  
  Accounts payable                                             325,032      430,107  
  Accrued liabilities                                           42,089       50,034  
  Long-term debt reclassified as current                        55,000       55,000  
                                                             ----------   ----------
   Total current liabilities                                   456,256      538,627 
                                                             ----------   ----------
Long-term debt                                                   8,051        3,496  
Other long-term liabilities                                     12,238       11,015  

Commitments and contingencies

Minority interest                                               10,643       10,472
              
Shareholders' equity:              
  Series B Convertible Preferred stock $50 par value per share:            
  
    Authorized 200,000 shares, issued and outstanding:                 
     14,000 and 15,000 shares                                      700          750  
  Common stock $.01 par value per share:                
    Authorized 100,000,000 shares,              
      issued:  41,723,335 and 41,352,973 shares                    417          413
  Additional paid-in capital                                   285,027      284,666  
  Treasury stock                                               (67,311)     (67,311)
  Retained earnings (deficit)                                  (95,161)     (83,047) 
                                                             ----------   ----------
   Total shareholders' equity                                  123,672      135,471  
                                                             ----------   ----------
     Total liabilities and shareholders' equity              $ 610,860    $ 699,081  
                                                             ==========   ==========
</TABLE>

See accompanying notes to the consolidated financial statements.           

PAGE
<PAGE>
                INTELLIGENT ELECTRONICS, INC. and Subsidiaries
                    Consolidated Statements of Operations
                    (in thousands, except per-share data)
                                (unaudited)

                                                        Three months ended
                                                     -------------------------
                                                        May 3,        May 4,
                                                         1997          1996
                                                     -----------   -----------
Revenues                                              $ 668,256     $ 877,939
                                                        
Cost of goods sold                                      635,596       832,355
                                                     -----------   ----------- 
                                                         
    Gross profit                                         32,660        45,584 
                                                     -----------   -----------
  
Operating expenses:
  Selling, general and administrative expenses           44,456        42,935
  Amortization of intangibles, primarily goodwill         1,261         2,400
                                                     -----------   -----------
    Total operating expenses                             45,717        45,335 
                                                     -----------   -----------
Income (loss) from operations                           (13,057)          249

Other income (expense):
  Investment and other income (expense), net                170          (105)
  Interest expense                                       (3,805)       (3,867) 
                                                     -----------   -----------
Loss before income tax benefit and
   and minority interest                                (16,692)       (3,723)

Income tax benefit                                       (4,902)         (529)
                                                     -----------   -----------
Loss before minority interest                           (11,790)       (3,194)

Minority interest                                           (99)            -
                                                     -----------   -----------
Net loss                                                (11,889)       (3,194)
Preferred stock dividend                                    225             -
                                                     -----------   -----------
Net loss applicable to common shareholders            $ (12,114)    $  (3,194)
                                                     ===========   ===========
Net loss per common share applicable
  to common shareholders                              $   (0.34)    $   (0.09)
                                                     ===========   ===========
Weighted average number of common shares
  and share equivalents outstanding:                     36,066        34,537


See accompanying notes to the consolidated financial statements.           

PAGE
<PAGE>
                 INTELLIGENT ELECTRONICS, INC. and Subsidiaries  
                    Consolidated Statements of Cash Flows
                              (in thousands)
                                (unaudited)

                                                           Three months ended
                                                          ---------------------
                                                            May 3,      May 4, 
                                                             1997        1996 
                                                          ----------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                               $ (11,889)  $ (3,194)
   Adjustments to reconcile net loss to net cash
       provided by (used for) operating activities:
      Depreciation and amortization                           6,361      6,879
      Write-down of property and equipment                        -      1,057
      Deferred taxes                                              -       (861)
      Provision for losses on trade receivables               1,313        803 
      Provision for write-down of inventory                   3,588      2,617
      Minority interest in net income of XLConnect               99          -
      Changes in assets and liabilities:
         Accounts receivable                                  8,121     (5,381) 
         Inventory                                           67,853     11,121
         Other current assets                                   898        770
         Accounts payable                                  (105,075)   (28,653)
         Accrued liabilities                                 (6,982)    (2,426) 
                                                          ----------  ---------
   Net cash used for operating activities                   (35,713)   (17,268)
                                                          ----------  ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment, net of disposals   (4,693)    (3,704)
   Other                                                          -         30
                                                          ----------  ---------
   Net cash used for investing activities                    (4,693)    (3,674)
                                                          ----------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term borrowings                         5,500          -
   Net proceeds from working capital advances                31,200      9,079
   Reduction in capital lease obligations                    (1,178)      (893) 
                                                          ----------  ---------
Net cash provided by financing activities                    35,522      8,186
                                                          ----------  ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS                    (4,884)   (12,756)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             42,881     34,618
                                                          ----------  ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $  37,997   $ 21,862
                                                          ==========  =========

See accompanying notes to the consolidated financial statements.  
                      

PAGE
<PAGE>

              Intelligent Electronics, Inc. and Subsidiaries

               Notes to Consolidated Financial Statements 
 
            (Dollars in thousands, except share-related data)

                             (unaudited)


(1)   Basis of Presentation
      ---------------------
The consolidated financial statement information included herein is 
unaudited but, in the opinion of management, reflects all adjustments, 
consisting of normal recurring adjustments, necessary for a fair statement 
of the results for the interim periods presented.  These financial 
statements should be read in conjunction with the audited financial 
statements and notes thereto included in Intelligent Electronics, Inc.'s 
(the "Company") Annual Report on Form 10-K for the year ended February 1, 
1997.  


(2)   New Accounting Standards
      ------------------------
In February 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 128, Earnings per Share ("SFAS No. 
128") which is effective for financial statements issued for periods ending 
after December 15, 1997.  SFAS No. 128 simplifies the previous standards 
for computing earnings per share and requires the disclosure of basic and 
diluted earnings per share.  For the fiscal year ended February 1, 1997, the
quarter ended May 3, 1997 (the "first quarter of fiscal 1997") and the quarter
ended May 4, 1996, the amount reported as net loss per share applicable to 
common shareholders is no different than that which would have been reported 
for basic and diluted net loss per share applicable to common shareholders 
in accordance with SFAS No. 128.


(3)   Sale of the Reseller Network 

The Company provides information technology products, services and 
solutions to network integrators and resellers, through its Reseller 
Network (the "Indirect Business") and to large and small corporate 
customers, educational institutions and governmental agencies in the United 
States, primarily through its branch locations (the "Direct Business").  On 
April 29, 1997, the Company entered into a definitive agreement with Ingram 
Micro Inc. ("Ingram") to sell the stock and related assets and liabilities 
of the Indirect Business for $78 million, subject to reduction (but not 
below $68 million) depending on the date of closing and also on certain 
revenues during the period through closing.  The purchase price will be 
payable by assumption of liabilities, based on the balance sheet of the 
Indirect Business at the time of closing and cash if the purchase price
exceeds such liabilities.  The Company will be required, at closing, to pay 
to Ingram any amount by which the estimated net assumed liabilities exceed 
the adjusted purchase price and to fund a $10 million escrow for final 
settlement for any purchase price adjustments and indemnity claims.  The 
consummation of the transaction is subject to the approval of the Company's 
shareholders and required government approvals, as well as other customary 
conditions.  It is currently anticipated that the transaction will close 
during the Company's second quarter of fiscal 1997 or shortly thereafter.  
However, there can be no assurance that the sale will be completed.  The 
Company expects, on a preliminary basis, that the sale of the Indirect 
Business will result in a pre-tax gain, subject to reduction depending on 
the date of closing and also on certain revenues during the period through 
closing.  Additionally, pursuant to a separate agreement, Ingram will provide 
XLSource, the Company's direct hardware sales organization, with its product 
requirements over an initial term of up to three years following the closing.  
The agreement requires XLSource to purchase 100% of its requirements of
products available from Ingram and requires minimum annual product purchases 
of $600 million (a total of $1.8 billion).  In any year in which XLSource
purchases less than the minimum requirement, XLSource can either pay Ingram
liquidated damages in an amount equal to 1.5% of the shortfall or extend
the term of the agreement and defer the amount of the shortfall multiplied
by a factor based on the year in which the shortfall occurred into a fourth
or fifth year.  The Company has guaranteed to Ingram performance by XLSource
of its obligations under the agreement.  On May 14, 1997, pursuant to the 
definitive agreement, the Company obtained an irrevocable letter of credit 
in the amount of $5 million to secure the Company's obligation to make
certain payments to Ingram in the event the definitive agreement is 
terminated under certain circumstances.

As a result of the definitive agreement, the Company has been advised that 
it is unlikely that a spin-off of XLConnect Solutions, Inc. ("XLConnect"), 
would qualify as a tax-free distribution of stock.  Accordingly, the 
Company does not currently intend to effect the spin-off of XLConnect.

The Company is continuing to explore its strategic alternatives relative to 
XLSource, including the sale of all or a portion of XLSource, and is 
currently in negotiations with an unaffiliated third party for the sale of 
a substantial portion of XLSource (representing approximately 60% of the 
Company's Direct Business' revenues during the first quarter of fiscal 
1997).  There can be no assurance that any such sale will be completed.


(4)  Credit Facilities
     -----------------
In April 1996, the Company signed a  financing agreement, which has a 
rolling eighteen month term and is renewable for six-month periods with the 
consent of the lender and allows for total borrowings of up to $225 
million, subject to a borrowing base formula. The facility can be used for 
inventory financing, equipment financing and working capital purposes.  
This facility imposes certain financial covenants relating to the Company's 
current ratio, working capital, and tangible net worth.  The Company was in 
compliance with these covenants as of May 3, 1997 and believes that it will 
remain in compliance during fiscal 1997, if the sale of the Indirect 
Business is completed and the operating plans to improve XLSource are 
successfully implemented.  Until necessary shareholder approval for the 
sale of the Indirect Business is obtained, the $55 million long-term portion
of the facility (due October 5, 1998) will be classified as a current 
liability on the Company's Consolidated Balance Sheets.  Notwithstanding 
such classification, the lender has agreed that this long-term portion will 
not be treated as short-term debt for purposes of the financing agreement.

The Company had borrowings of $31.2 million under this financing agreement 
for working capital purposes, which are classified as short-term debt on 
the Company's Consolidated Balance Sheets as of May 3, 1997.  All other 
borrowings under this agreement (other than the $55 million long-term 
portion indicated above) are included in accounts payable on the Company's 
Consolidated Balance Sheets.  As of May 3, 1997, $6.9 million was available 
after considering the borrowing base formula and trade payables principally 
outstanding to a vendor related to the lender.  

In March 1997, the financing agreement was amended to delete the assets of 
XLConnect, the Company's 80%-owned professional services subsidiary, and 
XLConnect's subsidiaries from the borrowing base, which in effect reduces 
the amount the Company can borrow under this agreement by $20 million.  In 
conjunction with the March 1997 amendment, XLConnect entered into a 
separate secured credit agreement with this lender in the amount of $25 
million, which the Company has guaranteed. 

On May 14, 1997, pursuant to the definitive agreement for the sale of the
Indirect Business, the Company obtained an irrevocable letter of credit from 
the above lender in the amount of $5 million to secure the Company's obligation
to make certain payments to Ingram, in the event the definitive agreement is 
terminated under certain circumstances.  A portion of the financing agreement
has been reserved for the letter of credit and will be subtracted from the 
borrowing base.

On May 15, 1997, the Company through XLSource, pledged its 80% ownership 
of XLConnect's common stock to the above lender as security for the 
Company's obligations to such lender.  The Company can borrow under the 
financing agreement up to 50% of the market value (calculated daily) of the 
XLConnect pledged stock.

On February 28, 1997, XLConnect entered into a transaction with a third 
party whereby the third party agreed to provide an unsecured loan of up to 
$11 million (the "Loan") to be used for specific business purposes.  Up to 
$5.5 million is available to be drawn prior to August 28, 1997.  The 
remaining amount may be drawn after August 28, 1997 and prior to February 
28, 1998, subject to XLConnect satisfying certain financial criteria.  
Interest is payable at an initial annual rate of 4% for the first two 
years, adjusts to 5% for the next two years and then adjusts to 6% for the 
remaining term.  Principal payments of $0.75 million will be made quarterly 
beginning in August 1999 with a final payment of $1.25 million due on 
August 28, 2002.  As of May 3, 1997, $5.5 million was outstanding under the 
Loan.  In connection with the Loan, XLConnect issued to the third party a 
warrant to purchase up to 325,000 shares of XLConnect's common stock, which 
becomes exercisable on February 28, 1998, August 28, 1998 or February 28, 
2002, depending on the occurrence of certain events, at a per share 
exercise price of $6.65, and expires on February 27, 2007.  After 
considering the effects of the issuance of the warrant and the resultant 
discounting of the Loan, the effective interest rate is 7.4%.


(5)  Preferred Stock
     --------------- 
On April 30, 1997, 1,000 shares of the Company's Series B Convertible 
Preferred Stock were converted into 370,362 shares of the Company's Common 
Stock.  

From May 16, 1997 through June 9, 1997, an additional 7,000 shares of the 
Company's Series B Convertible Preferred Stock were converted into 
2,746,811 shares of Common Stock.


(6)  Supplemental Cash Flow Information
     ----------------------------------
Cash payments during the three-month periods ended May 3, 1997 and May 4, 
1996 included interest of $2,982 and $5,272, respectively, and income taxes 
of $120 and $3, respectively.  


(7)  Contingencies
     -------------
On May 14, 1997, pursuant to the definitive agreement for the sale of the 
Indirect Business, the Company obtained an irrevocable letter of credit in 
the amount of $5 million to secure the Company's obligation to make certain 
payments to Ingram in the event the definitive agreement is terminated under
certain circumstances.

In December 1994, several class action lawsuits were filed in the United 
States District Court for the Eastern District of Pennsylvania (Civil 
Action Nos. 94-3753, 94-CV-7410, 94-CV-7388, and 94-CV-7405) against the 
Company and certain directors and officers.  These lawsuits were 
consolidated with a class action lawsuit filed in 1992 against the Company, 
certain directors and officers, and the Company's auditor's in the United 
States District Court for the Eastern District of Pennsylvania (Civil 
Action No. 92-CV-1905).  A derivative lawsuit was also filed in December 
1994 in the Court of Common Pleas of Philadelphia County (No. 803) against 
the Company and certain of its directors and officers.  These lawsuits 
alleged violations of certain disclosure and related provisions of the 
federal securities laws and breach of fiduciary duties, including 
allegations relating to the Company's practices regarding vendor marketing 
funds, and sought damages in unspecified amounts as well as other monetary 
and equitable relief.  The Company has reached a tentative settlement of 
the class and derivative actions, without admitting any liability, under 
which the class and derivative plaintiffs will receive a total of $10 
million.  Of the $10 million, the Company will be contributing $3.8 million 
and the balance will be funded by insurance.  The settlements are subject 
to court approval.  Management cannot predict when the final settlements 
will be approved. The amount required to be paid by the Company was accrued 
in fiscal 1994.

In addition, the Company is involved in various litigation and arbitration 
matters in the ordinary course of business.  The Company believes that it 
has meritorious defenses in and is vigorously defending against all such 
matters.  Management believes the resolution of these matters will not have 
a material adverse effect on the Company's financial position or results of 
operations.


PAGE
<PAGE>

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


Results of Operations
---------------------

The following table shows revenues and gross margins as a percentage of 
revenues, by business segment, for the quarter ended May 3, 1997 (the 
"first quarter of fiscal 1997") and for the quarter ended May 4, 1996 (the 
"first quarter of fiscal 1996") (dollars in millions).

<TABLE>
<CAPTION>
                             1st Quarter of Fiscal 1997    1st Quarter of Fiscal 1996 
                                                Gross                         Gross
                              Revenues         Margin       Revenues         Margin
                              --------        --------      --------        --------
<S>                            <C>              <C>          <C>              <C>
Indirect Business              $ 590            1.3%         $ 814            2.8%
Direct Business                  203           12.2%           189           11.5%
Intercompany eliminations *     (125)            --           (125)            -- 
                              --------        --------      --------        --------
Totals                         $ 668            4.9%         $ 878            5.2% 
                              ========        ========      ========        ========

</TABLE>

* Intercompany eliminations consist primarily of sales from the Indirect 
  Business to the Direct Business.


Revenues in the Indirect Business declined 27.5% in the first quarter of 
fiscal 1997 compared to the first quarter of fiscal 1996 as a result of 
continued competitive pressures throughout the industry primarily due to 
open sourcing and the uncertainty regarding the future of the Indirect
Business.  The Indirect Business has experienced a trend of declining sales 
in recent quarters caused by the Company's inability to retain and attract 
customers resulting from a number of factors.  These factors include: fewer 
product lines offered by the Company compared to its larger competitors; a 
less favorable allocation of constrained products (which can command a 
higher gross margin) compared to the prior year; increased competition due 
to open sourcing; and continued consolidation in the reseller channel. 

The decrease in the gross profit percentage in the Indirect Business in the 
first quarter of fiscal 1997 from the first quarter of fiscal 1996 was due 
primarily to the pricing structure adopted by the Company to retain 
business, which was caused by the uncertainty regarding the future of the 
Indirect Business, a less favorable allocation of constrained products and 
continued competitive pressures in the industry.  

Revenues in the Direct Business increased 7.4% in the first quarter of 
fiscal 1997 compared to the first quarter of fiscal 1996.  The majority of 
the increase was due to increased revenues from XLConnect, which is the 
services sector of the Direct Business.

The increase in the gross margin percentage for the Direct Business in the 
first quarter of fiscal 1997 compared to the first quarter of fiscal 1996 
was attributable to a higher proportion of revenues from XLConnect, which 
generates a higher gross margin percent than direct hardware sales.

Selling, general and administrative expenses ("SG&A") increased 3.5% or 
$1.5 million in the first quarter of fiscal 1997 (6.7% of revenues) as 
compared to the first quarter of fiscal 1996 (4.9% of revenues).  The 
increase was due to increased SG&A at XLConnect, partially offset by 
decreased SG&A in the Indirect Business and at XLSource.  XLConnect's SG&A 
increased $3.9 million due to higher overhead costs to support XLConnect's 
growth and enable it to operate as a separate public company, as well as 
the continued development of XLConnect's direct sales force combined with 
an increase in marketing programs.

Amortization of intangibles decreased in the first quarter of fiscal 1997 
compared to the first quarter of fiscal 1996 due to the write-off in the 
third quarter of fiscal 1996 of approximately $55.5 million of goodwill 
related to the Indirect Business.

The Company's effective tax rate for the first quarter of fiscal 1997 was a 
29.4% benefit compared to a 14.2% benefit for the first quarter of fiscal 
1996.  The increase in the effective tax rate was due primarily to a lower 
proportion of non-deductible goodwill amortization compared to the taxable 
loss.


Liquidity Outlook 

During fiscal 1996 and the first quarter of fiscal 1997, both of the 
Company's segments incurred operating losses.  Management has been 
exploring the Company's strategic alternatives, and in connection 
therewith, on April 29, 1997, the Company entered into a definitive 
agreement with Ingram to sell the stock and related assets and liabilities 
of the Indirect Business for $78 million, subject to reduction (but not 
below $68 million) depending on the date of closing and also on certain 
revenues during the period through closing.  The purchase price will be 
payable by assumption of liabilities, based on the balance sheet of the 
Indirect Business at the time of closing and cash if the purchase price
exceeds such liabilities.  The Company will be required, at closing, to pay 
to Ingram any amount by which the estimated net assumed liabilities exceed 
the adjusted purchase price and to fund a $10 million escrow for final 
settlement for any purchase price adjustments and indemnity claims.  The 
consummation of the transaction is subject to the approval of the Company's 
shareholders and required government approvals, as well as other customary 
conditions.  It is currently anticipated that the transaction will close
during the Company's second quarter of fiscal 1997 or shortly thereafter.  
However, there can be no assurance that the sale will be completed.  The 
Company expects, on a preliminary basis, that the sale of the Indirect 
Business will result in a pre-tax gain, subject to reductions depending on 
the date of closing and also on certain revenues during the period through 
closing.  On May 14, 1997, pursuant to the definitive agreement for the sale 
of the Indirect Business, the Company obtained an irrevocable letter of credit 
in the amount of $5 million to secure the Company's obligation to make certain 
payments to Ingram in the event the definitive agreement is terminated under 
certain circumstances.  In the event the transaction is not consummated, 
and management's operating plans are not achieved, the Company's operating 
results will continue to adversely affect cash flows and liquidity.

The Company is continuing to explore its strategic alternatives with respect 
to XLSource, including the implementation of operating plans to improve its 
results and the possible sale of all or a part of XLSource.  The Company is
currently in negotiations with an unaffiliated third party for the sale of
a substantial portion of XLSource (representing approximately 60% of the 
Company's Direct Business' revenues during the first quarter of 1997). 
There can be no assurance that such results will improve or that any such 
sale will be completed.  In the event management's plans relative to XLSource
are not achieved, the Company's operating results will continue to adversely 
affect cash flows and liquidity.
 
The Company believes it will be in compliance with all of the financial 
covenants of its $225 million financing agreement throughout fiscal 1997, 
if the sale of the Indirect Business is completed and the operating plans 
to improve XLSource are successfully implemented.  Until necessary 
shareholder approval is obtained for such sale, the $55 million long-term 
portion of the agreement will be classified as a current liability on the 
Company's Consolidated Balance Sheets.  Notwithstanding such classification,
the lender has agreed that the long-term debt, which is due October 5, 1998,
will not be treated as short-term debt for purposes of the financing agreement.


Liquidity and Capital Resources
-------------------------------
The Company has financed its growth to date from stock offerings, bank and 
subordinated borrowings, inventory financing and internally generated 
funds. The principal uses of its cash have been to fund its accounts 
receivable and inventory, make acquisitions, repurchase common stock, 
invest in systems technology, and pay cash dividends.

As of May 3, 1997, the Company had cash and cash equivalents of $38.0 
million compared to $42.9 million at February 1, 1997.  Working capital was 
negative $22.3 million at May 3, 1997 compared to negative working capital 
of $18.3 million at February 1, 1997.  The reason for the negative working 
capital is the reclassification of $55 million of long-term debt to a 
current liability, as discussed above in 'Liquidity Outlook'.  Without this 
reclassification, the Company would have had positive working capital of 
$32.7 million as of May 3, 1997 and $36.7 million as of February 1, 1997.

During the first quarter of fiscal 1997, cash used for operating activities 
totaled $35.7 million compared to $17.3 million of cash used for operating 
activities during the first quarter of fiscal 1996.  The increase in the 
cash used for operating activities can be attributed to increased operating 
losses plus the increase in the net usage of cash for working capital 
purposes (accounts receivable, inventory and accounts payable).

As of May 3, 1997, the Company had a $225 million financing agreement, of 
which $6.9 million was available after considering the borrowing base 
formula and trade payables principally outstanding to a vendor related to 
the lender.  The Company had borrowings of $31.2 million under this 
agreement for working capital purposes as of May 3, 1997, which are 
classified as short-term debt on the Company's Consolidated Balance Sheets. 
The Company believes it will be in compliance with all of the financial 
covenants of its financing agreement throughout fiscal 1997, if the sale of 
the Indirect Business is completed and the operating plans to improve 
XLSource are successfully implemented.  Until necessary shareholder 
approval is obtained for such sale, the $55 million long-term portion of 
the agreement will be classified as a current liability in the Company's 
Consolidated Balance Sheets.  Notwithstanding such classification, the 
lender has agreed that the long-term debt, which is due October 5, 1998, 
will not be treated as short-term debt for purposes of the financing agreement.

In March 1997, the financing agreement was amended to delete the assets of 
XLConnect, the Company's 80%-owned professional services subsidiary, and 
XLConnect's subsidiaries from the borrowing base, which in effect reduces 
the amount the Company can borrow under this agreement by $20 million.  In 
conjunction with the March 1997 amendment, XLConnect entered into a 
separate secured credit agreement with this lender in the amount of $25 
million, which the Company has guaranteed. 

On May 14, 1997, pursuant to the definitive agreement for the sale of the 
Indirect Business, the Company obtained an irrevocable letter of credit 
from the above lender in the amount of $5 million to secure the Company's 
obligation to make certain payments to Ingram in the event the definitive 
agreement is terminated under certain circumstances.  A portion of the 
financing agreement has been reserved for the letter of credit and will 
be subtracted from the borrowing base.

On May 15, 1997, the Company through XLSource, pledged its 80% ownership 
of XLConnect's common stock to the above lender as security for the 
Company's obligations to such lender.  The Company can borrow under the 
financing agreement up to 50% of the market value (calculated daily) of the 
XLConnect pledged stock.

Based on the Company's expected level of operations, including plans to 
reduce the operating losses of XLSource, and capital expenditure 
requirements, management believes that the Company's cash, internally 
generated funds and available financing arrangements, will be sufficient to 
meet the Company's cash requirements at least through the end of fiscal 
1997.  However, if the Company is unable to complete the transaction with 
Ingram, or continues to experience losses and negative operating cash 
flows, the Company's vendors could elect to restrict product availability 
and modify credit terms, which could have a material adverse effect on the 
Company's liquidity position.  In such circumstances, there can be no 
assurance that alternative sources of financing could be obtained.

Inflation and Seasonality
-------------------------
The Company believes that inflation has not had a material impact on its 
operations or liquidity to date.  The Company's financial performance does 
not exhibit significant seasonality, although certain computer product 
lines and the Direct Business follow a seasonal pattern with peaks 
occurring near the end of the calendar year.


PAGE
<PAGE>

              Intelligent Electronics, Inc. and Subsidiaries

                        Part II - Other Information

 
Item 2. Changes in Securities
        ---------------------

     (c)   During the first quarter of fiscal 1997, the holder of the 
           Company's Series B Convertible Preferred Stock ("Preferred 
           Stock") converted 1,000 shares of Preferred Stock having a 
           stated value of $1,000,000, together with the accrued premium 
           thereon of $32,384, into 370,362 shares of Common Stock.  The 
           sale of the shares of Common Stock was exempt from the 
           registration provisions of the Securities Act (the "Act") 
           pursuant to Section 3(a)(9) for exchanges with existing security 
           holders.  A registration statement covering the resale of the 
           Common Stock issued upon conversion of the Preferred Stock has  
           been declared effective under the Act.


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

     (a)   Exhibits

           10.  Volume Purchase Agreement dated April 29, 1997 between 
                XLSource, Inc. (a wholly-owned subsidiary) and Ingram Micro 
                Inc.  *


     (b)   Reports filed on Form 8-K.

           The Company's Report on Form 8-K dated February 10, 1997 
           relating to the approval by the Board of Directors of the 
           distribution of 13,325,000 shares of XLConnect Solutions, Inc. 
           in a spin-off to the Company's shareholders.







     * Portions of this Agreement have been omitted pursuant to a request 
       for confidential treatment.



PAGE
<PAGE>

                                 SIGNATURES


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




                                     Intelligent Electronics, Inc.



                                     /s/ Thomas J. Coffey           
                                     -------------------------------------
                                     Thomas J. Coffey
                                     Senior Vice President, Chief
                                     Financial Officer and 
                                     Chief Accounting Officer







Date:  June 16, 1997