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   August 2, 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 September 5, 
1997.
<PAGE>
            INTELLIGENT ELECTRONICS, INC. and Subsidiaries

                                 INDEX


                                                                     Page No.
                                                                     --------
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements


          Consolidated Balance Sheets

            August 2, 1997 and February 1, 1997                            3


          Consolidated Statements of Operations 

            Three and Six Months Ended August 2, 1997 and August 3, 1996   4


          Consolidated Statements of Cash Flows 

             Six Months Ended August 2, 1997 and August 3, 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 4.   Submission of Matters to a Vote of Security Holders             14

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


SIGNATURES                                                                16

<PAGE>
<TABLE>
<CAPTION>

PART I -  FINANCIAL INFORMATION                                   FORM 10-Q
                 INTELLIGENT ELECTRONICS, INC. and Subsidiaries            
                       
                       Consolidated Balance Sheets          
                 (in thousands, except share-related data)           

                                                          August 2,    February 1,
                                                            1997          1997
                                                         -----------   -----------
                                                         (unaudited)            
                              Assets                    
                                   
Current assets:                                   
  <S>                                                      <C>           <C>
  Cash and cash equivalents                                $ 44,513      $ 42,881  
  Escrow receivables                                         45,313             -  
  Accounts receivable, net                                   42,305       149,107  
  Inventory                                                   4,100       311,669
  Prepaid expenses and other current assets                   1,810         4,834  
  Deferred income taxes                                       7,617        11,861
                                                          -----------   -----------
                                     
   Total current assets                                     145,658       520,352  
                                     
Property and equipment, net                                   7,835        58,712  
Intangible assets, primarily goodwill, net                   44,835        91,914  
Other assets                                                 20,736        28,103   
                                                          -----------  -----------
     Total assets                                          $219,064      $699,081  
                                                          ===========  ===========
                                     
                 Liabilities and Shareholders' Equity             
                                    
Current liabilities:                                   
  Short-term debt                                          $  4,283      $  3,486  
  Accounts payable                                           33,081       430,107  
  Accrued liabilities                                        58,990        50,034  
  Long-term debt reclassified as current                          -        55,000  
                                                          -----------  -----------
   Total current liabilities                                 96,354       538,627  
                                                          -----------  -----------
Long-term debt                                                5,103         3,496  
Other long-term liabilities                                  16,907        11,015  
                                   
Commitments and contingencies               
                                   
Minority interest                                            10,963        10,472  
                                   
Shareholders' equity:                                   
  Series B Convertible Preferred stock $50 par value per share:            
    Authorized 200,000 shares, issued and outstanding:    
     4,000 and 15,000 shares                                    200           750 
  Common stock $.01 par value per share:                                   
  
    Authorized 100,000,000 shares,                                   
      issued:  45,617,796 and 41,352,973 shares                 456           413  
  Additional paid-in capital                                285,826       284,666  
  Treasury stock                                            (66,847)      (67,311)
  Accumulated deficit                                      (129,898)      (83,047)
                                                          -----------  -----------
   Total shareholders' equity                                89,737       135,471   
                                                          -----------  -----------
     Total liabilities and shareholders' equity            $219,064      $699,081 
                                                          ===========  ===========
                                     
See accompanying notes to the consolidated financial statements.   
/TABLE
<PAGE>
<TABLE>
<CAPTION>

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

                                                    Three months ended          Six months ended
                                                  -----------------------     ---------------------
                                                  August 2,     August 3,     August 2,   August 3,
                                                    1997          1996          1997        1996
                                                  ---------     ---------     ---------   ---------
<S>                                               <C>           <C>           <C>         <C>
Revenues                                          $186,755      $220,215      $386,207    $408,888
                                          
Cost of goods sold                                 161,747       196,342       336,346     363,311
                                                  ---------     ---------     ---------   ---------
    Gross profit                                    25,008        23,873        49,861      45,577 
                                                  ---------     ---------     ---------   ---------

Operating expenses:                                          
  Selling, general and administrative expenses      26,586        25,133        54,165      48,513
  Amortization of intangibles, primarily goodwill    1,261         1,267         2,522       2,550 
                                                  ---------     ---------     ---------   ---------
    Total operating expenses                        27,847        26,400        56,687      51,063
                                                  ---------     ---------     ---------   ---------
Loss from operations                                (2,839)       (2,527)       (6,826)     (5,486)
                                              
Other income (expense):
  Investment and other income (expense), net           102           (18)          168         (28)
  Interest expense                                    (743)       (2,919)       (2,357)     (4,860)
  Loss on XL Transaction                           (27,194)            -       (27,194)          - 
                                                  ---------     ---------     ---------   ---------
                                          
Loss from continuing operations before income
  tax provision (benefit) and minority interest    (30,674)       (5,464)      (36,209)    (10,374)
                     
Income tax provision (benefit)                       4,277        (1,679)        4,277      (2,853)
                                                  ---------     ---------     ---------   ---------
Loss from continuing operations before                                       
  minority interest                                (34,951)       (3,785)      (40,486)     (7,521) 
           
Minority interest                                     (320)            -          (419)          - 
                                                  ---------     ---------     ---------   ---------
Loss from continuing operations                    (35,271)       (3,785)      (40,905)     (7,521)  
Discontinued operation:                                          
    Income (loss) from discontinued operation (net
    of tax provision (benefit) of $(1,973)  
    $1,684, $(6,875) and $2,329)                    (5,840)        1,409       (12,095)      1,951
  Gain on sale of discontinued operation (net
    of tax provision of $4,582 and                                          
    $4,582)                                          6,875             -         6,875           -
                                                  ---------     ---------     ---------   ---------
Net loss                                           (34,236)       (2,376)      (46,125)     (5,570)

Preferred stock dividend                               130             -           355           -
                                          
Net loss applicable to common shareholders        $(34,366)     $ (2,376)     $(46,480)   $ (5,570)
                                                  =========     =========     =========   =========

Earnings (loss) per share:
  Continuing operations                           $  (0.92)     $  (0.11)     $  (1.11)   $  (0.22)
  Discontinued operation                             (0.15)         0.04         (0.32)       0.06
  Sale of discontinued operation                      0.18             -          0.18           - 
                                                  ---------     ---------     ---------   ---------
Net loss per common share applicable                                         
 to common shareholders                           $  (0.89)     $  (0.07)     $  (1.25)   $  (0.16)
                                                  =========     =========     =========   =========
Weighted average number of common shares
  and share equivalents outstanding:                38,539        34,718        37,303       34,627 
             

See accompanying notes to the consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>

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

                                                                  Six months ended 
                                                              -------------------------
                                                               August 2,      August 3, 
                                                                 1997           1996
                                                              ----------     ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   <S>                                                        <C>            <C>
   Net loss                                                   $ (46,125)     $  (5,570) 
    Adjustments to reconcile net loss to net cash                             
      provided by (used for) operating activities:                          
      Depreciation and amortization                               6,129          5,769 
      Write-down of property and equipment                        2,720              - 
      Deferred taxes                                              2,864          2,392
      Provision for losses on trade receivables                   4,909            769 
      Provision for write-down of inventory                       2,811          1,690
      Minority interest in net income of XLConnect                  491              - 
      (Income) loss from discontinued operation                  12,095         (1,951)
      Gain on RND Transaction                                    (6,875)             - 
      Changes in assets and liabilities excluding 
      effects of business sales:
         Accounts receivable                                    (12,261)       (23,715)
         Inventory                                               (8,993)        13,006
         Prepaid expenses and other current assets                  158          2,126
         Accounts payable                                         6,033        (39,670)
         Accrued liabilities                                     38,065            320 
                                                              ----------     ----------
Net cash provided by (used for) operating activities              2,021        (44,834) 
                                                              ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:                                       
   Acquisition of property and equipment, net of disposals       (3,705)        (1,475) 
   Proceeds from XL Transaction                                 135,740              -
   Transfers to escrow receivables                              (50,313)             - 
                                                              ----------     ----------
   Net cash provided by (used for) investing activities          81,722         (1,475) 
                                                              ----------     ----------
CASH FLOWS FROM FINANCING ACTIVITIES:                                       
   Repayment of long-term debt reclassified as current          (55,000)             -
   Net proceeds from working capital advances                         -          6,240 
   Proceeds from exercise of stock options                            -          1,867 
   Proceeds from employee stock purchase plan                        93            247 
   Proceeds from loans on cash value of life insurance policies   4,220              -
   Proceeds from long-term debt                                   5,500              -
   Reduction in capital lease obligations                          (559)          (371) 
                                                              ----------     ----------
   Net cash provided by (used for) financing activities         (45,746)         7,983 
                                                              ----------     ----------
   Net cash provided by (used for) continuing operations         37,997        (38,326) 
  
   Cash provided by (used for) discontinued operation           (36,365)        27,652
                                                              ----------     ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              1,632        (10,674) 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                 42,881         34,618 
                                                              ----------     ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                    $  44,513      $  23,944 
                                                              ==========     ========== 

See accompanying notes to the consolidated financial statements.
/TABLE
<PAGE>

                  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 six months ended August 2, 1997 and August 3, 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 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 thirty days to review the Closing Balance Sheet and communicate 
to the Company any disagreements.  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 was put into escrow subject to release if and 
when the consent of two customers, whose contract with XLSource is being 
assigned in the transaction, are obtained.  On September 15, 1997, 
approximately $19.0 million was released as a result of obtaining 
one of the required consents.  As of September 16, 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.  

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 obtaining the remaining 
required consent and resolution of the Closing Balance Sheet, which are 
expected to take place in the quarter ending November 1, 1997.

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 November 1, 1997.  Results of the 
Indirect Business have been reported separately as a discontinued operation 
in the accompanying Consolidated Statements of Operations.  

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

<TABLE>
<CAPTION>
                                            Three months ended        Six months  ended   
                                           ---------------------    ----------------------
                                            August 2,   August 3,    August 2,   August 3,
                                              1997        1996         1997        1996 
                                           ----------  ----------   ----------  ----------
<S>                                        <C>         <C>          <C>         <C>
Revenues                                    $ 319,017   $ 646,485   $ 787,821   $1,335,751
Costs and expenses                            326,830     643,392     806,791    1,331,471
                                            ----------  ----------  ----------  ----------
Income (loss) before taxes                     (7,813)      3,093     (18,970)       4,280
Income tax provision (benefit)                 (1,973)      1,684      (6,875)       2,329
                                            ----------  ----------  ----------  ----------
Income (loss) from discontinued operation   $  (5,840)  $   1,409   $ (12,095)  $    1,951
                                            ==========  ==========  ==========  ==========

</TABLE>

Pro forma results of operations of the Company for the three and six months 
ended August 2, 1997 and August 3, 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        Six months  ended   
                                           ----------------------   ----------------------
                                            August 2,   August 3,    August 2,   August 3,
                                              1997        1996         1997        1996 
                                           ----------  ----------   ----------  ----------

<S>                                        <C>         <C>          <C>         <C>
Revenues from continuing operations        $  85,613   $  82,954    $ 164,910   $ 153,146
Loss from continuing operations                 (438)     (1,439)      (2,558)     (6,148)
Loss from continuing operations per share      (0.01)      (0.04)       (0.07)      (0.18)

</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)   Management Changes
      ------------------
As a result of the RND Transaction,  the services of Michael A. Norris, 
President of the Company and Chief Executive Officer of the Reseller 
Network, were determined to be no longer needed in running the day-to-day 
operations of the Company.  As such, Mr. Norris' employment will be 
terminated effective September 30, 1997.  Until that date, Mr. Norris will 
assist with the closure of issues relating to the RND and XL Transactions.

Effective September 12, 1997, Thomas J. Coffey resigned as Senior Vice 
President, Treasurer and Chief Financial and Accounting Officer.  Mr. 
Coffey has signed a consulting agreement with the Company to assist with 
the closure of issues relating to the RND and XL Transactions.  This  
agreement can be terminated with two weeks' written notice by either party. 
 
Eugene E. Marinelli, Jr. has been appointed Chief Financial and Accounting
Officer.  Mr. Marinelli has been employed by the Company since January 1996
as its Director of Taxation.  Prior to joining the Company, Mr. Marinelli was 
a partner in the accounting firm of Marinelli and Kemmey.

Additionally, Richard D. Sanford, Chairman of the Board and Chief Executive 
Officer of the Company has agreed to remain in the Company's employ through 
December 31, 1997. 

(5)   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. The 
Company is currently in negotiations with the lender for a reduced 
facility.  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 August 2, 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 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 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 August 2, 1997, $22.2 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 related to 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 has been 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 August 2, 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%.

(6)   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.

Subsequent to August 2, 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 loss per share from 
continuing operations would have been $(0.84) and $(0.98) for the three and 
six months ended August 2, 1997, respectively, and $(0.09) and $(0.19) for 
the three and six months ended August 3, 1996, respectively.

(7)   Supplemental Cash Flow Information
      ----------------------------------
Cash payments during the six-month periods ended August 2, 1997 and 
August 3, 1996 included interest of $3,555,000 and $4,330,000, respectively, 
and income taxes of $143,000 and $85,000, respectively.  

(8)   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.  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>
Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations


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

Continuing Operations

Revenues declined 15.2% in the quarter ended August 2, 1997 ("Q2 1997") 
compared to the quarter ended August 3, 1996 ("Q2 1996").  Revenues from 
XLSource declined 21.1% as a result of the uncertainty surrounding the XL 
Transaction consummated in July 1997 and the reduced number of locations 
after the sale. XLConnect revenues increased 26.1% which was attributable 
to growth in all of XLConnect's services disciplines.  Revenues for the six 
months ended August 2, 1997 also declined when compared to the same period 
last year for the reasons explained above.

Gross margin as a percent of revenues was 13.4% and 12.9% for Q2 1997 and 
the six months ended August 2, 1997, respectively, compared to 10.8% and 
11.1% for Q2 1996 and the six months ended August 3, 1996, respectively.  
The increase in the gross margin percent for Q2 1997 and the six months 
ended August 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 direct hardware sales.

Selling, general and administrative expenses ("SG&A") increased by 
approximately $1.5 million in Q2 1997 (14.2% of revenues) as compared to Q2 
1996 (11.4% of revenues). SG&A increased by approximately $5.7 million for 
the six months ended August 2, 1997 (14.0% of revenues) as compared to the 
six months ended August 3, 1996 (11.9% of revenues).  These increases were 
primarily due to an increase in SG&A of approximately $2.6 million and $6.5 
million for Q2 1997 and the six months ended August 2, 1997, respectively, 
at XLConnect and severance and other costs for corporate personnel of 
approximately $1.5 million, partially offset by savings at XLSource as a 
result of the XL Transaction in July 1997.  The increases at XLConnect were 
due to higher overhead costs to support XLConnect's growth and enable it to 
operate as a separate public company, as well as increased facility costs 
necessary to support overall personnel growth and new market expansion.  
The Company has reduced the headcount and expenses of its corporate staff, 
which is expected to save approximately $2.2 million per quarter.  Due to 
transitional issues and the timing of these changes, the full effect is not 
expected to be realized until the Company's fourth quarter (quarter ending 
January 31, 1998).  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 Q2 1997 and the six months ended August 
2, 1997  compared to the same periods last year as a result of the use of 
proceeds from the XLConnect initial public offering in October 1996, the 
sale of Preferred Stock in October 1996 and January 1997 and the proceeds
from the XL Transaction to repay outstanding debt.

The Company's effective tax rate for  Q2 1997 was a 13.9% provision 
compared to a 30.7% benefit for Q2 1996.  For the six months ended August 
2, 1997, the effective tax rate was an 11.8% provision compared to a 27.5% 
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 and 
an increase in the valuation allowance for deferred tax assets. 

As a result of XL Transaction, the Company expects revenues, SG&A, 
amortization of intangibles and interest expense to decrease, and gross 
margin percent to increase as a higher portion of the Company's revenues 
will be generated from XLConnect.

Discontinued Operation
----------------------
For Q2 1997 and the six months ended August 2, 1997, the pre-tax loss was 
$7.8 million and $19.0 million, respectively, compared to a pre-tax profit 
of $3.1 million and $4.3 million, respectively, for the same periods last 
year. 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 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 August 2, 1997, the Company had cash and cash equivalents of $44.5 
million compared to $42.9 million at February 1, 1997.  In addition, the 
Company has approximately $45.3 million in escrow classified as a current 
asset pending resolution of the Closing Balance Sheets in the XL and RND 
Transactions 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.  On September 15, 1997, the Company received from escrow $19.0 
million after receiving one of the required consents in the XL Transaction. 
It is anticipated that approximately $21.3 million of the remaining 
escrows will be resolved and disbursed to the Company, to the extent not
used to fund any adjustments, by January 31, 1998 (the end of the Company's 
fourth fiscal quarter).  An additional $5 million in escrow is expected 
to be resolved and disbursed to the Company, to the extent not used to fund
any adjustments, 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.

Working capital was $49.3 million at August 2, 1997 compared to negative 
working capital of $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 August 2, 1997, the Company had a $225 million financing agreement, 
of which $22.2 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 related to the 
lender.

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. However, if the Company continues to experience losses and 
negative operating cash flows, the vendors of XLSource 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 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.  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; product supply 
shortages; open-sourcing of products from vendors; rapid product 
improvement and technological change, short product life cycles and 
resulting obsolescence risks; legal proceedings; risks associated with the
return of transaction escrows; and risks of unavailability of adequate 
products, credit, capital or financing.
<PAGE>
              INTELLIGENT ELECTRONICS, INC. and Subsidiaries

                       Part II - Other Information

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

      (c) During the second quarter ended August 2, 1997, the holder of the 
          Company's Series B Convertible Preferred Stock ("Preferred 
          Stock") converted 10,000 shares of Preferred Stock having a 
          stated value of $10,000,000, together with the accrued premium 
          thereon of $310,373, into 3,894,461 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 4.   Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

The Annual Meeting of Shareholders of the Company was held on July 16, 
1997.  Shareholders voted on the following items:

(a) For the approval of the sale of the Company's Reseller Network (the 
"Indirect Business"), and the adoption of the Stock Purchase Agreement 
providing for the sale of the Indirect Business:

                    
               For         Against          Abstain     
      -------------------------------------------------
           18,745,644      343,420          156,021   


(b) For the Election of Directors:

                                       Votes          Votes       Broker
   Director         Term Expiration     For         Withheld     Non-Votes 
   -----------------------------------------------------------------------
   Roger J. Fritz        2000       32,015,895      2,191,198        0
   Arnold S. Hoffman     2000       31,793,529      2,413,564        0  
   Michael A. Norris     2000        32,831,054     1,376,039        0 
   John A. Porter        2000        30,628,074     3,579,019        0     
                      

   Other directors whose term of office as a director continued after the 
meeting were as follows:

   Barry M. Abelson
   Christopher T.G. Fish
   William E. Johnson
   Gregory A. Pratt
   William L. Rulon-Miller
   Richard D. Sanford   



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 dated July 1, 1997 reporting, 
         under Item 5, the signing of an Asset Purchase Agreement with 
         GECITS, pursuant to which the Company agreed to sell certain 
         assets of its direct computer hardware sales business, and 
         XLConnect, an 80% owned subsidiary of the Company, agreed to sell 
         specified services contracts and related assets.

         The Company's Report on Form 8-K dated July 18, 1997 reporting, 
         under Item 2, the consummation of 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 Reseller Network to 
         Ingram.

<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. Marienlli, Jr.
                                    Vice President, Chief
                                    Financial Officer and 
                                    Chief Accounting Officer




Date:  September 16, 1997