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   November 1, 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: 41,786,137 shares of 
Common Stock, par value $0.01 per share were outstanding at December 1, 
1997.

PAGE
<PAGE>

                INTELLIGENT ELECTRONICS, INC. and Subsidiaries

                                   INDEX



                                                                       Page No.
                                                                       --------

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements


          Consolidated Balance Sheets

            November 1, 1997 and February 1, 1997                           3


          Consolidated Statements of Operations 

            Three and Nine Months Ended November 1, 1997 
            and November 2, 1996                                            4


          Consolidated Statements of Cash Flows 

            Nine Months Ended November 1, 1997 and November 2, 1996         5


          Notes to Consolidated Financial Statements                        6


Item 2.   Management's Discussion and Analysis of Financial Condition  
            and Results of Operations                                      11


PART II.  OTHER INFORMATION

Item 2.   Change in Securities                                             14

Item 6.   Exhibits and Reports on Form 8-K                                 14


SIGNATURES                                                                 15


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

                     INTELLIGENT ELECTRONICS, INC. and Subsidiaries   
                               Consolidated Balance Sheets     
                        (in thousands, except share-related data)  
                     
                                                            November 1,    February 1,
                                                                1997            1997
                                                            -----------    -----------
                                                            (unaudited)
                                    Assets            
                     
Current assets:                     
  <S>                                                       <C> <C>        <C> <C>
  Cash and cash equivalents                                 $   48,666     $   42,881
  Escrow receivables                                            26,313              -  
  Accounts receivable, net                                      46,329        149,107
  Inventory                                                      1,226        311,669
  Prepaid expenses and other current assets                      2,292          4,834
  Deferred income taxes                                          7,646         11,861
                                                            -----------    -----------

   Total current assets                                        132,472        520,352
                       
Property and equipment, net                                      8,446         58,712
Intangible assets, primarily goodwill, net                      44,205         91,914
Other assets                                                    21,335         28,103
                                                            -----------    -----------
     Total assets                                           $  206,458     $  699,081
                                                            ===========    ===========
                       
                 Liabilities and Shareholders' Equity               
                      
Current liabilities:                     
  Short-term debt                                           $       34     $    3,486
  Accounts payable                                              26,742        430,107
  Accrued liabilities                                           58,925         50,034
  Long-term debt reclassified as current                             -         55,000
                                                            -----------    -----------
   Total current liabilities                                    85,701        538,627
                                                            -----------    -----------
Long-term debt                                                   5,119          3,496
Other long-term liabilities                                     13,524         11,015
                     
Commitments and contingencies                        
                      
Minority interest                                               11,222         10,472
                     
Shareholders' equity:                     
  Series B Convertible Preferred stock $50 par value per share:  
    Authorized 200,000 shares, issued and outstanding:              
     None and 15,000 shares                                          -            750
  Common stock $.01 par value per share:                       
    Authorized 100,000,000 shares,                     
      issued:  47,052,959 and 41,352,973 shares                    471            413
  Additional paid-in capital                                   286,145        284,666
  Treasury stock                                               (66,847)       (67,311)
  Retained deficit                                            (128,877)       (83,047)
                                                            -----------    -----------
   Total shareholders' equity                                   90,892        135,471
                                                            -----------    -----------
     Total liabilities and shareholders' equity             $  206,458     $  699,081
                                                            ===========    ===========

See accompanying notes to the consolidated financial statements. 
</TABLE>
PAGE
<PAGE>
<TABLE>
<CAPTION>
                  INTELLIGENT ELECTRONICS, INC. and Subsidiaries        
                       Consolidated Statements of Operations             
                       (in thousands, except per-share data)         
                                   (unaudited)                             
                                          
                                                      Three months ended         Nine months ended
                                                    ------------------------   ------------------------
                                                    November 1,  November 2,   November 1,  November 2,
                                                       1997         1996          1997         1996
                                                    -----------  -----------   -----------  -----------
<S>                                                  <C>          <C>           <C>          <C>
Revenues                                             $ 85,636     $189,637      $471,843     $598,525
Cost of goods sold                                     70,301      179,980       406,647      543,291 
                                                    -----------  -----------   -----------  ----------- 
Gross profit                                           15,335        9,657        65,196       55,234
                                                    -----------  -----------   -----------  -----------
Operating expenses:                                          
  Selling, general and administrative expenses         13,613       32,072        67,778       80,585
  Branch closure costs                                      -        9,790             -        9,790
  Amortization of intangibles, primarily goodwill   
                                                          630        1,162         3,152        3,712
                                                    -----------  -----------   -----------  -----------
Total operating expenses                               14,243       43,024        70,930       94,087
                                                    -----------  -----------   -----------  -----------
Income (loss) from operations                           1,092      (33,367)       (5,734)     (38,853)
Other income (expense):          
  Investment and other income, net     
                                                          639           52           807           24
  Interest expense                                       (449)      (2,931)       (2,806)      (7,791)
  Loss on XL Transaction                                    -            -       (27,194)           - 
                                                    -----------  -----------   -----------  -----------

Income (loss) from continuing operations before
  income tax provision (benefit) and minority interest   
                                                        1,282      (36,246)      (34,927)     (46,620)
Income tax provision (benefit)                              -       (3,458)        4,277       (6,311)
                                                    -----------  -----------   -----------  -----------
Income (loss) from continuing operations before
  minority interest                                     1,282      (32,788)      (39,204)     (40,309)
Minority interest                                        (259)         (10)         (678)         (10)
                                                    -----------  -----------   -----------  -----------
Income (loss) from continuing operations  
                                                        1,023      (32,798)      (39,882)     (40,319)

Discontinued operation:
  Loss from discontinued operation (net of
   tax benefit of $2,658, $6,875, and $329)                 -      (60,642)      (12,095)     (58,581)
  Gain on sale of discontinued operation (net 
   of tax provision of $4,582)                              -            -         6,875            -
                                                    -----------  -----------   -----------  -----------
Net income (loss)                                       1,023      (93,440)      (45,102)     (98,900)
Preferred stock dividend                                    2            -           357            -
                                                    -----------  -----------   -----------  -----------
Net income (loss) applicable to
   common shareholders                               $  1,021     $(93,440)     $(45,459)    $(98,900)
                                                    ===========  ===========   ===========  ===========
Income (loss) per share:
   Continuing operations                             $   0.02     $  (0.92)     $  (1.04)    $  (1.14)
   Discontinued operation                                   -        (1.70)        (0.31)       (1.65)
   Sale of discontinued operation                           -            -          0.18           -   
                                                    -----------  -----------   -----------  -----------

Net income (loss) per common share applicable
  to common shareholders                             $   0.02     $  (2.62)     $  (1.17)    $  (2.79)
                                                    ===========  ===========   ===========  ===========
   
Weighted average number of common shares
  and share equivalents outstanding:                   41,761       35,599        38,788       35,498

See accompanying notes to the consolidated financial statements.
</TABLE>
PAGE
<PAGE>
<TABLE>
<CAPTION>
                  INTELLIGENT ELECTRONICS, INC. and Subsidiaries    
                      Consolidated Statements of Cash Flows    
                            (in thousands, unaudited)            

                                                                      Nine months ended
                                                                   ------------------------
                                                                   November 1,  November 2,   
                                                                      1997         1996 
                                                                   -----------  -----------
                                   
CASH FLOWS FROM OPERATING ACTIVITIES:                                  
   <S>                                                             <C>          <C>
   Net loss                                                        $ (45,102)   $ (98,900)   
   Adjustments to reconcile net loss to net cash         
      provided by (used for) operating activities: 
      Depreciation and amortization                                    7,733        8,530     
      Write-down of property and equipment                             2,768          227     
      Branch closure costs                                                 -        9,790 
      Deferred taxes                                                   2,940         (275)   
      Provision for losses on trade receivables                        5,172        1,104     
      Provision for write-down of inventory                            2,919        3,340     
      Minority interest in net income of XLConnect                       678           10     
      Loss from discontinued operation                                12,095       58,581     
      Gain on RND Transaction                                         (6,875)           -         
      Changes in assets and liabilities excluding effects
      of business sales:                           
         Accounts receivable                                         (16,548)        (909)   
         Inventory                                                    (6,228)      21,062 
         Prepaid expenses and other current assets                      (269)       2,410 
         Accounts payable                                               (305)     (50,052) 
         Accrued liabilities                                          34,821          263
                                                                   -----------  -----------
   Net cash used for operating activities                             (6,201)     (44,819)
                                                                   -----------  -----------                        
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property and equipment, net of disposals            (5,337)      (3,099)
   Proceeds from XL Transaction                                      135,740            -         
   Transfers to escrow receivables                                   (50,313)           -         
   Transfers from escrow receivables                                  19,000            -         
   Other                                                                (744)        (673)
                                                                   -----------  -----------
   Net cash provided by (used for) investing activities               98,346       (3,772)
                                                                   -----------  -----------                         
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
   Repayment of long-term debt reclassified as current               (55,000)           -
   Repayment of long-term debt                                             -      (20,000)
   Proceeds from initial public offering by subsidiary                     -       45,254
   Net proceeds from sale of preferred stock and warrants                  -        4,692
   Net repayments from working capital advances                            -       (6,271)
   Proceeds from exercise of stock options                                 -        1,981
   Proceeds from employee stock purchase plan                             93          247
   Proceeds from loans on cash value of life insurance policies        4,220            - 
   Repayment of loans on cash value of life insurance policies        (4,220)           - 
   Proceeds from long-term debt                                        5,500            -
   Reduction in capital lease obligations                               (588)        (414)   
                                                                   -----------  -----------
   Net cash provided by (used for) financing activities              (49,995)      25,489   
                                                                   -----------  -----------   
   Net cash provided by (used for) continuing operations              42,150      (23,102)   

   Cash provided by (used for) discontinued operation                (36,365)      47,307
                                                                   -----------  -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS                              5,785       24,205     

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                      42,881       34,618 
                                                                   -----------  -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                         $  48,666    $  58,823 
                                                                   ===========  ===========                                 

See accompanying notes to the consolidated financial statements.        
</TABLE>
                                 
PAGE
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              INTELLIGENT ELECTRONICS, INC. and Subsidiaries

               Notes to Consolidated Financial Statements 

                            (unaudited)


(1)   Basis of Presentation
      ---------------------
The consolidated financial statement information of Intelligent 
Electronics, Inc. (the "Company") 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 consolidated financial statements and notes 
thereto included in the Company's Annual Report on Form 10-K for the year 
ended February 1, 1997.

On July 18, 1997, the Company sold its business (the "Indirect Business") 
of providing information technology products, services and solutions to 
network integrators and resellers to Ingram Micro Inc. ("Ingram") in the 
RND Transaction (as defined in Note 3) and, accordingly, the Indirect 
Business is treated as a discontinued operation in the accompanying 
financial statements.  Unless otherwise indicated, amounts and disclosures 
referred to herein relate to continuing operations.  

(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, and the three and nine months ended November 1, 1997 and November 
2, 1996, the amount reported as net income (loss) per share applicable to 
common shareholders is no different than that which would have been 
reported for basic and diluted net income (loss) per share applicable to 
common shareholders in accordance with SFAS No. 128.

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130, Reporting Comprehensive Income 
("SFAS 130"), which is effective for financial statements issued for 
periods beginning after December 15, 1997.  The Company does not expect the 
adoption of SFAS 130 to have a material effect on its reported financial 
condition or results of operations.

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 131, Disclosures about Segments of an 
Enterprise and Related Information ("SFAS 131"), which is effective for 
financial statements issued for periods beginning after December 15, 1997. 
SFAS 131 establishes standards for the way publicly-traded companies report 
information about operating segments as well as disclosures about products 
and services, geographic areas and major customers.  The Company does not 
expect the adoption of SFAS 131 to have a material effect on its reported 
financial condition or results of operations.

(3)   Sale of Businesses 
      ------------------
On July 18, 1997, the Company and certain of its direct and indirect 
wholly-owned subsidiaries and XLConnect Solutions, Inc. ("XLConnect"), an 
80% owned subsidiary, consummated the sale of certain assets under an Asset 
Purchase Agreement, as amended (the "Purchase Agreement") with GE Capital 
Information Technology Solutions Acquisition Corp. (the "Buyer"), a 
subsidiary of GE Capital Information Technology Solutions, Inc. 
("GECITS"), pursuant to which:

(a)     The Company sold to the Buyer certain assets related to the 
Company's direct computer hardware sales business ("XLSource"), 
consisting primarily of the inventory, accounts receivable and customer 
contracts relating to 20 of the 24 XLSource locations and real property 
leases and fixed assets related to six of such 20 locations; and 

(b)     XLConnect sold to the Buyer certain specified services 
contracts and related assets, consisting principally of accounts receivable 
and fixed assets.

The purchase price paid by the Buyer in the transaction pursuant to the 
Purchase Agreement (the "XL Transaction") was approximately $136.5 
million, based on the estimated net book value of the assets being sold of 
approximately $95.0 million. Of the total purchase price paid in the XL 
Transaction, XLConnect received approximately $10.3 million (based on the 
estimated net book value of the assets acquired from it of approximately 
$5.6 million).    The Company delivered a Balance Sheet as of the closing 
date (the "Closing Balance Sheet") to the Buyer on August 29, 1997.  The 
Buyer has reviewed the Closing Balance Sheet and the Company and the Buyer 
are currently discussing resolution of the issues related thereto.  Of the 
purchase price, approximately $102.9 million was paid in cash at closing, 
with approximately $32.8 million paid into escrow. 

Approximately $22.8 million of the total escrow was subject to release if 
and when the consent of two customers, whose contracts with XLSource were 
assigned in the transaction, are obtained.  On September 15, 1997, $19.0 
million was released as a result of obtaining one of the required consents.  
As of December 12, 1997, the other consent was still pending and the 
Company has therefore deferred the recognition of the premium allocated to 
that contract, totaling approximately $0.9 million.  

The remaining $10.0 million in escrow is to be retained for up to 240 days 
to fund purchase price adjustments and obligations of the Company and 
XLConnect under the Purchase Agreement, including the obligation to 
repurchase from the Buyer any accounts receivable which were sold to the 
Buyer and remain uncollected 120 days after the closing date.  The Company has 
received a notice from the Buyer that it is obligated to repurchase certain
receivables from the Buyer.  The Company has not yet determined whether it
is so obligated, or the amount, if any, of the obligation.

As a result of the XL Transaction, the Company has preliminarily recorded a 
pre-tax loss of approximately $27.2 million, net of transaction costs, plus 
a tax provision of approximately $1.9 million.  The tax provision is due to 
differences between the tax bases of the assets being sold and their 
amounts for financial reporting purposes (primarily goodwill).  The loss 
from the XL Transaction will be finalized after the resolution of the 
remaining required consent and the Closing Balance Sheet issues, which are 
expected to take place in the quarter ending January 31, 1998.

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 $78.0 million (the "RND Transaction").  On July 16, 1997, 
the shareholders of the Company approved the sale of the Indirect Business 
and on July 18, 1997, the sale was consummated.   The purchase price was 
paid by assumption of liabilities, based on the estimated balance sheet of 
the Indirect Business at the time of closing. The Company paid to Ingram 
approximately $4.5 million, which was the amount by which the estimated net 
assumed liabilities exceeded the purchase price. 

Three separate escrow accounts were established as part of the RND 
Transaction.  An escrow in the amount of $10.0 million was established for 
final settlement of any purchase price adjustments and indemnity claims.  
This escrow was funded by an intercompany payable due from the Indirect 
Business to the Company, which was paid by Ingram into escrow.  A portion 
of this escrow (no more than $8.0 million) will be released upon settlement 
of the Closing Balance Sheet, to the extent not used to fund any 
adjustments.  The remaining $2.0 million will remain in escrow for at least 
six months after the closing date to cover any indemnity claims.  

Another escrow account in the amount of $2.5 million was established 
pending resolution of certain issues between the Company and Ingram 
relating to pre-closing revenues.  This issue is expected to be resolved in 
conjunction with the Closing Balance Sheet and the escrow will be disbursed 
to the Company to the extent not used to fund any adjustments. 

A third escrow account in the amount of $5.0 million was established to 
secure the Company's obligations under the Amended and Restated Volume 
Purchase Agreement ("Supply Agreement"), as more fully described below. 
This escrow will be released after the Company completes its obligations 
under the Supply Agreement in three to five years.  

As a result of the RND Transaction, the Company has preliminarily recorded 
a pre-tax gain of approximately $11.5 million, net of transaction costs, 
and a tax provision of approximately $4.6 million. The gain on the RND 
Transaction will be finalized after resolution of the Closing Balance Sheet 
and the issue relating to pre-closing revenues, which are expected to take 
place in the quarter ending January 31, 1998.  Results of the Indirect 
Business have been reported separately as a discontinued operation in the 
accompanying Consolidated Statements of Operations.

The Company and Ingram are currently finalizing resolution of purchase 
price adjustments and Supply Agreement issues.  The Company believes that 
such resolution will not have a material adverse effect on the Company.

The results of operations of the Indirect Business excluded from continuing 
operations are summarized as follows (in thousands):

                                   Three
                                   months
                                   ended                Nine months  ended     
                                 November 2,      November 1,     November 2, 
                                    1996             1997            1996  
                                 -----------      -----------     ----------- 
Revenues                          $ 672,349        $ 787,821      $2,008,100
Costs and expenses                  735,649          806,791       2,067,010
                                 -----------      -----------     ----------- 
Loss before taxes                   (63,300)         (18,970)        (58,910)
Income tax benefit                    2,658            6,875             329
                                 -----------      -----------     ----------- 
Loss from discontinued operation  $ (60,642)      $  (12,095)     $  (58,581)
                                 ===========      ===========     ===========

Pro forma results of operations of the Company for the three months ended 
November 2, 1996 and the nine months ended November 1, 1997 and November 2, 
1996, assuming the XL Transaction and the RND Transaction were consummated 
on February 4, 1996, are as follows (in thousands):

<TABLE>
<CAPTION>
                                            Three
                                            months
                                            ended            Nine months  ended 
                                          November 2,    November 1,      November 2, 
                                             1996           1997             1996  
                                          -----------    -----------      ----------- 
<S>                                        <C>            <C>              <C>
Revenues from continuing operations        $ 74,370       $ 250,546        $ 227,516
Loss from continuing operations              (1,716)        (28,731)          (7,864)
Loss from continuing operations per share     (0.05)          (0.74)           (0.22)

</TABLE>

Pro forma financial information presented above is not necessarily 
indicative of the results of operations that would have occurred had the XL 
Transaction and the RND Transaction taken place at the beginning of the 
periods presented or of future results of  operations.

Under the terms of the Supply Agreement, XLSource agreed to order 100% of 
its product requirements available from Ingram, of no less than $1.8 
billion, over a three-year period.  If the minimum annual commitment is not 
met, the Company may elect to extend this contract for up to two years.  In 
addition, if in any one year, purchases are below a certain level, an 
adjustment may be made to the cost of products purchased from Ingram. The 
Company has guaranteed to Ingram performance by XLSource of its obligations 
under the Supply Agreement.  In connection with the Supply Agreement, 
Ingram agreed that certain product purchases by GE Capital Information 
Technology Solutions - North America, Inc., an affiliate of the Buyer 
("GECITS-NA"), from Ingram which are in excess of GECITS-NA's current 
purchases from Ingram will be credited against XLSource's $1.8 billion 
purchase commitment under the Supply Agreement.   The Company believes that 
GECITS-NA is not required to purchase any minimum amount of product from 
Ingram.  XLSource and the Company have not been released from any of their 
obligations regarding the $1.8 billion commitment, and the Company has 
delivered to Ingram a $7.5 million irrevocable letter of credit and the 
$5.0 million escrow account discussed above to secure the purchase 
commitment and other obligations of  the Company.  At the Company's 
election,  the $5.0 million escrow account can be replaced by a $5.0 
million irrevocable letter of credit. 

Although the Company believes that its purchases from Ingram and those of 
GECITS-NA will satisfy XLSource's purchase obligations under the Supply 
Agreement, there can be no assurance in that regard.  In the event such 
purchase obligations are not satisfied within the original term of the 
Supply Agreement or any extension period, certain liquidated damages, in 
the amount of 1.5% of any short-fall, are due to Ingram.  Although the 
Company does not currently believe that the payment of any such liquidated 
damages will have a material adverse effect on the Company, there can be no 
assurance in that regard.

(4)   Credit Facilities
      -----------------
In September 1997, the Company's financing agreement was amended to reduce 
the allowable borrowings from $225 million to $55 million, subject to a 
borrowing base formula, as a result of the RND and XL Transactions and the 
Company's resultant decreased need for financing.  This  financing 
agreement was originally signed in April 1996, has a rolling eighteen month 
term and is renewable for six-month periods with the consent of the lender. 
The facility can be used for inventory financing, equipment financing and 
working capital purposes. The Company and the lender are currently 
finalizing an amended financing agreement to further reduce the size of the 
facility to $40 million, subject to a borrowing base formula.  The Company 
repaid the $55 million long-term debt reclassified as current plus all 
current interest-bearing borrowings with proceeds from the XL Transaction. 
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 November 1, 1997 and believes that it 
will remain in compliance during fiscal 1997.

In March 1997, the financing agreement was amended to delete the assets of 
XLConnect and XLConnect's subsidiaries from the borrowing base, which in 
effect reduced 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 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 25% of the market value (calculated daily) of the XLConnect 
pledged stock.

On July 18, 1997, the Company obtained a $7.5 million irrevocable letter of 
credit to secure the Company's obligations under the Supply Agreement.  A 
portion of the financing agreement has been reserved for the letter of 
credit and 120% of the face amount of the letter of credit is subtracted 
from the borrowing base.

All borrowings under this agreement are included in accounts payable on the 
Company's Consolidated Balance Sheets. As of November 1, 1997, 
approximately $19.3 million was available after considering the borrowing 
base formula (including the reduction of the $7.5 million irrevocable 
letter of credit) and trade payables outstanding to a vendor affiliated 
with the lender.  

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 was available and was 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, which 
have been met.  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 November 1, 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
      ---------------
During the quarter ended May 3, 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.  

During the quarter ended August 2, 1997, 10,000 shares of the Company's 
Series B Convertible Preferred Stock were converted into 3,894,461 shares 
of Common Stock.

During the quarter ended November 1, 1997, the remaining 4,000 shares of 
the Company's Series B Convertible Preferred Stock were converted into 
1,435,163 shares of the Company's Common Stock.

Assuming the conversion of all shares of the Preferred Stock had taken 
place at the beginning of the periods presented, the income (loss) per 
share from continuing operations would have been $0.02 and $(0.96) for the 
three and nine months ended November 1, 1997, respectively, and $(0.79) and 
$(0.98) for the three and nine months ended November 1, 1996, respectively.

(6)   Supplemental Cash Flow Information
      ----------------------------------
Cash payments during the nine-month periods ended November 1, 1997 and 
November 2, 1996 included interest of $3,662,000 and $8,460,000, 
respectively, and income taxes of $480,000 and $95,000, respectively.  

(7)   Contingencies
      -------------
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 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.  This 
settlement was approved by the Court on November 26, 1997, but will not 
become final until a thirty day appeal period has past.  Of the $10 
million, the Company contributed $3.8 million and the balance was funded by 
insurance. The amount 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
---------------------
Continuing Operations

Revenues declined in the quarter and nine months ended November 1, 1997 
compared to the quarter and nine months ended November 2, 1996.  These 
decreases resulted from the sale of certain XLSource locations and certain 
specified services contracts of XLConnect as part of the XL Transaction 
consummated in July 1997.  On a pro forma basis assuming that the RND and 
XL Transactions were consummated on February 4, 1996, revenues for the 
quarter ended November 2, 1996 ("Q396") were $74.4 million compared to 
$85.6 million for the quarter ended November 1, 1997 ("Q397").  Revenues 
were $227.5 million for the nine months ended November 2, 1996 compared to 
$250.5 million for the nine months ended November 1, 1997.  Both XLSource 
and XLConnect contributed to these pro forma increases. 

Gross margin as a percent of revenues was 17.9% and 13.8% for Q397 and the 
nine months ended November 1, 1997, respectively, compared to 5.1% and 9.2% 
for Q396 and the nine months ended November 2, 1996, respectively.  The 
increase in the gross margin percent for Q397 and the nine months ended 
November 2, 1997 compared to the same periods last year was attributable to 
a higher proportion of revenues from XLConnect, which generates a higher 
gross margin percent than the direct hardware sales of XLSource.  In 
addition, certain charges were taken during Q396, totaling approximately 
$15.7 million, which reduced the reported gross margin percent for Q396 and 
the nine months ended November 2, 1996.  On a pro forma basis, gross margin 
percent for Q396 and the nine months ended November 2, 1996 was 19.4% and 
16.0%, respectively, compared to 17.9% and 18.8% for Q397 and the nine 
months ended November 1, 1997, respectively.  The decrease in the pro forma 
gross margin percent for Q397 compared to Q396 was due to declining margins 
in the hardware business resulting from continued competitive pricing 
pressures and the loss of certain vendor discounts as a result of decreased 
purchase volumes. 

Selling, general and administrative expenses ("SG&A") decreased by 
approximately $18.5 million in Q397 (15.9% of revenues) as compared to Q396 
(16.9% of revenues). SG&A decreased by approximately $12.8 million for the 
nine months ended November 1, 1997 (14.4% of revenues) as compared to the 
nine months ended November 2, 1996 (13.5% of revenues).  These decreases 
were primarily due to the consummation of the XL Transaction in July 1997 
and the reduction in the corporate staff as a result of the RND and XL 
Transactions.  On a pro forma basis, SG&A for Q396 and the nine months 
ended November 2, 1996 was $16.0 million (21.6% of revenues) and $44.1 
million (19.3% of revenues), respectively, compared to $13.6 million (15.9% 
of revenues) and $46.9 million (18.7 % of revenues) for Q397 and the nine 
months ended November 1, 1997, respectively.  The pro forma decrease from 
Q396 to Q397 was due primarily to continued headcount reductions in the 
Company's corporate staff and at XLSource, partially offset by an increase 
in XLConnect's SG&A to support continued growth of the services business.  
It is anticipated that the decrease in the corporate staff will somewhat 
mitigate the continued increase in SG&A related to XLConnect's growth.

Interest expense decreased for both Q397 and the nine months ended November 
1, 1997  compared to the same periods last year as a result of the receipt 
of proceeds from the XLConnect initial public offering in October 1996, the 
sale of Preferred Stock in October 1996 and January 1997 and proceeds from 
the XL Transaction which were used to repay outstanding debt.  Investment 
and other income increased as the Company's investable cash increased due 
to the factors above.

For Q397, the Company did not record a tax provision due to the use of net 
operating losses to offset taxable income. The Company's effective tax rate 
for Q396 was a 9.5% benefit.  For the nine months ended November 1, 1997, 
the effective tax rate was an 12.3% provision compared to a 13.5% benefit 
for the same period last year.  These changes were primarily due to the 
write-off of non-deductible goodwill as part of the XL Transaction. 

Discontinued Operation
----------------------
For the nine months ended November 1, 1997, the pre-tax loss on 
discontinued operations was approximately $19.0 million compared to a pre-
tax loss of approximately $58.9 million for the same period last year, 
which included an impairment loss totaling approximately $61.6 million. 
This change was due to lower revenues and gross margin percent as a result 
of increased competitive pressures throughout the industry primarily due to 
open-sourcing and the uncertainty of the future of the Indirect Business.  
The Indirect Business experienced a trend of declining sales caused by the 
Company's inability to retain and attract customers resulting from a number 
of factors.  These factors included: 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 
prior periods; increased competition due to open-sourcing; and continued 
consolidation in the reseller channel.  

Liquidity and Capital Resources
-------------------------------
The Company has been financed to date from stock offerings, bank and 
subordinated borrowings, inventory financing, sales of businesses 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 November 1, 1997, the Company had cash and cash equivalents of 
approximately $48.7 million compared to approximately $42.9 million at 
February 1, 1997.  In addition, the Company has approximately $26.3 million 
in escrow classified as a current asset pending resolution of the Closing 
Balance Sheets and any indemnity claims in the XL and RND Transactions, the 
obligation to repurchase uncollected sold accounts receivables from GECITS 
and certain other issues. There is also a $5 million escrow included in 
Other assets on the Consolidated Balance Sheets which was established to 
secure the Company's obligations under the Ingram Supply Agreement.   It is 
anticipated that approximately $21.3 million of the escrows will be resolved
by January 31, 1998 (the end of the Company's first fiscal quarter).  An 
additional $5 million in escrow is expected to be resolved by May 2, 1998 
(the end of the Company's first fiscal quarter).  The remaining $5 million 
escrow will be held until the Company has satisfied its obligations 
under the Ingram Supply Agreement in three to five years.  The Company has
received a notice from GECITS that it is obligated to repurchase certain 
receivables from GECITS.  The Company has not yet determined whether it is
so obligated, or the amount, if any, of the obligation.

Working capital was approximately $46.8 million at November 1, 1997 
compared to negative working capital of approximately $18.3 million at 
February 1, 1997.  The increase was primarily due to the cash proceeds from 
the XL Transaction, net of the repayment of the $55 million long-term debt 
reclassified as current. 

As of November 1, 1997, the Company had a $55 million financing agreement, 
of which approximately $19.3 million was available after considering the 
borrowing base formula (including the reduction of the $7.5 million 
irrevocable letter of credit to secure the Company's obligations under the 
Ingram Supply Agreement) and trade payables outstanding to a vendor 
affiliated with the lender.  The Company and the lender are currently 
finalizing an amended financing agreement to further reduce the size of the 
facility to $40 million, subject to a borrowing base formula.

Based on the Company's expected level of operations, including plans to 
improve the performance of the remaining locations 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 for the next 
twelve months.

Inflation and Seasonality
-------------------------
The Company believes that inflation has not had a material impact on its 
operations or liquidity to date.  The Company believes that its business is 
subject to some seasonality, and that weaker sales in the services part of 
the business (XLConnect) may be experienced during the fourth quarter due 
to fewer business days and plant closings around the holidays.  The 
hardware part of the business (XLSource) follows a seasonal pattern with 
peaks occurring near the end of the calendar year.

Forward-Looking Statements
--------------------------
The matters discussed in this Form 10-Q that are forward-looking statements 
within the meaning of the federal securities laws are based on current 
management expectations that involve risks and uncertainties.  Potential 
risks and uncertainties include, without limitation, the impact of economic 
conditions generally and in the industry for microcomputer products and 
services; the potential decline generally in the level of demand for the 
Company's products and services; the potential termination or non-renewal 
of a supply or services agreement with a major vendor or customer; 
continued competitive and pricing pressures in the industry; billable 
technical employee and product supply shortages; open-sourcing of products 
from vendors; changes in the mix of utilization to provide billable 
services between employees and subcontractors; rapid product improvement 
and technological change, short product life cycles and resulting 
obsolescence risks; legal proceedings; risks associated with the 
transaction purchase price adjustments and the return of transaction 
escrows; and risks of unavailability of adequate products, credit, capital 
or financing.


PAGE
<PAGE>

             Intelligent Electronics, Inc. and Subsidiaries

                      Part II - Other Information

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

        (c)   During the third quarter ended November 1, 1997, the holder 
              of the Company's Series B Convertible Preferred Stock 
              ("Preferred Stock") converted 4,000 shares of Preferred Stock 
              having a stated value of $4,000,000, together with the 
              accrued premium thereon of $133,890, into 1,435,163 shares of 
              Common Stock.  The issuance of the shares of Common Stock was 
              exempt from the registration provisions of the Securities Act 
              of 1933 (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

              None

        (b)   Reports filed on Form 8-K.

              The Company's Report on Form 8-K/A dated July 18, 1997 and 
              filed with the Securities and Exchange Commission on 
              September 30, 1997 reporting, under Item 7, pro forma 
              financial information for the sale of certain assets of its 
              direct computer hardware sales business and certain 
              specified services contracts and related assets of 
              XLConnect to GECITS and the consummation of sale of the 
              Company's Indirect Business to Ingram.

     



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/ Eugene E. Marinelli, Jr. 
                                    ----------------------------   
                                        Eugene E. Marinelli, Jr. 
                                        Vice President, Chief
                                        Financial Officer and 
                                        Chief Accounting Officer







Date:  December 16, 1997

<PAGE>