==========================================================================

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   FORM 10-Q


               Quarterly Report Pursuant to Section 13 or 15(d)
                    of the Securities Exchange Act of 1934
                for the quarterly period ended August 1, 1998

                        Commission File Number 0-19558


                     CENTIGRAM COMMUNICATIONS CORPORATION
            (Exact name of registrant as specified in its charter)


           Delaware                                   94-2418021
   (STATE OF INCORPORATION)                        (I.R.S. EMPLOYER
                                                IDENTIFICATION NUMBER)

                             91 East Tasman Drive
                          San Jose, California 95134
                   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


      Registrant's telephone number, including area code:  (408) 944-0250





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
                                     ----      ----

The number of outstanding shares of the Registrant's Common Stock as of
August 28, 1998 was 7,171,000.

 ==========================================================================



<PAGE>

Part 1.  Financial Information
Item 1.   Financial Statements
                   Centigram Communications Corporation
                   Condensed Consolidated Balance Sheets
             (In thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                    August 1,    November 1,
                                                    1998         1997
                                                    -----------  -----------
                                                    (Unaudited)    (Note)
<S>                                                 <C>          <C>
ASSETS
Current assets:
    Cash and cash equivalents                          $15,958      $19,791
    Short-term investments                              36,303       32,262
    Trade receivables, net                              15,856       21,637
    Inventories                                          5,494        9,060
    Other current assets                                 1,473        2,370
                                                    -----------  -----------
        Total current assets                            75,084       85,120
Property and equipment, net                              6,847       12,893
Intangible assets, net                                   3,429        1,468
Deposits and other assets                                2,320          439
                                                    -----------  -----------
                                                       $87,680      $99,920
                                                    ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                    $5,183       $6,925
    Accrued compensation                                 4,705        5,141
    Accrued expenses and other liabilities              12,227        4,069
    Warranty and retrofit reserves                       1,660        2,161
                                                    -----------  -----------
        Total current liabilities                       23,775       18,296

Commitments and contingencies
Stockholders' equity:
    Preferred stock, $.001 par value, 1,000,000
        authorized; none outstanding                     --           --
    Common stock, $.001 par value, 25,000,000
        authorized; 7,171,000 and 7,110,000
        outstanding and capital in excess of
        par value                                       90,626       90,724
    Treasury stock, at cost                             (6,036)      (2,427)
    Accumulated deficit                                (20,920)      (6,670)
    Unrealized gain on investments                         331           68
    Cumulative translation adjustments                     (96)         (71)
                                                    -----------  -----------
        Total stockholders' equity                      63,905       81,624
                                                    -----------  -----------
                                                       $87,680      $99,920
                                                    ===========  ===========
See accompanying notes.

<FN>
Note: The balance sheet at November 1, 1997 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.  See accompanying notes.
</FN>
</TABLE>
<PAGE>














































                        Centigram Communications Corporation
                  Condensed Consolidated Statements of Operations
                (In thousands, except per share data - unaudited)
<TABLE>
<CAPTION>
                                        Quarter Ended       Nine Months Ended
                                   ----------------------  ----------------------
                                   August 1,   August 2,   August 1,   August 2,
                                   1998        1997        1998        1997
                                   ----------  ----------  ----------  ----------
<S>                                <C>         <C>         <C>         <C>
Net revenue                          $18,143     $27,010     $57,503     $79,822

Cost and expenses:
  Costs of goods sold                  8,837      11,549      28,061      33,731
  Research and development             4,056       4,959      14,143      16,103
  Selling, general and 
     administrative                    9,826      11,640      31,648      34,175
  Non-recurring charges               14,000         --       14,000       3,563
                                   ----------  ----------  ----------  ----------
                                      36,719      28,148      87,852      87,572
                                   ----------  ----------  ----------  ----------
Operating loss                       (18,576)     (1,138)    (30,349)     (7,750)
Other income, net                     15,074       4,437      16,403       5,501
                                   ----------  ----------  ----------  ----------
Income (loss) before income taxes     (3,502)      3,299     (13,946)     (2,249)
Provision for income taxes               164         150         304         226
                                   ----------  ----------  ----------  ----------
Net income (loss)                    ($3,666)     $3,149    ($14,250)    ($2,475)
                                   ==========  ==========  ==========  ==========

Basic and diluted earnings
(loss) per share                      ($0.53)      $0.45      ($2.05)     ($0.36)
                                   ==========  ==========  ==========  ==========

Shares used for basic
earnings (loss) per share              6,885       6,934       6,966       6,963
                                   ==========  ==========  ==========  ==========

Shares used for diluted
earnings (loss) per share              6,885       7,019       6,966       6,963
                                   ==========  ==========  ==========  ==========
</TABLE>
See accompanying notes.
<PAGE>











                         Centigram Communications Corporation
                    Condensed Consolidated Statements of Cash Flows
                               (In thousands - unaudited)
<TABLE>
<CAPTION>
                                                       Quarter Ended
                                                  ----------------------
                                                  August 1,   August 2,
                                                  1998        1997
                                                  ----------  ----------
<S>                                               <C>         <C>
Cash and equivalents, beginning of period           $19,791     $12,668
                                                  ----------  ----------
Cash flows from operations:
    Net loss                                        (14,250)     (2,475)
    Write-off of purchsed in-process technology       8,400        --
    Gain on sale of business units                  (14,302)     (3,598)
    Depreciation and amortization                     5,591       6,943
    Trade receivables                                 2,003       2,713
    Inventories                                         666       1,544
    Other assets                                       (977)        703
    Accounts payable                                 (2,135)       (858)
    Accrued expenses and other liabilities            5,306       2,435
                                                  ----------  ----------
                                                     (9,698)      7,407
                                                  ----------  ----------
Cash flows from investing:
    Purchase of short-term investments              (35,088)   (101,043)
    Proceeds from sales and maturities of
      short-term investments                         31,310     110,061
    Proceeds from the sale of CPE business unit      26,849        --
    Purchase of property and equipment               (1,817)     (5,783)
    Purchase of other assets                           --          (905)
    Acquisition of TTC                              (11,558)       --
                                                  ----------  ----------
                                                      9,696       2,330
                                                  ----------  ----------
Cash flows from financing:
    Proceeds from sale of common stock                3,267       1,991
    Purchase of treasury shares                         (78)       (114)
    Acquisition of treasury stock                    (7,020)     (2,958)
                                                  ----------  ----------
                                                     (3,831)     (1,081)
                                                  ----------  ----------
Net change in cash and equivalents                   (3,833)      8,656
                                                  ----------  ----------
Cash and equivalents, end of period                 $15,958     $21,324
                                                  ==========  ==========
</TABLE>
See accompanying notes.
<PAGE>





                        Centigram Communications Corporation
                   Notes to Condensed Consolidated Financial Statements
                                    (unaudited)


Basis of Presentation
        The accompanying condensed consolidated financial 
statements have been prepared by the Company without audit and 
reflect all adjustments (consisting of normal recurring 
adjustments) which are, in the opinion of management, 
necessary to reflect a fair statement of the results for the 
interim periods.  For further information, refer to the 
audited Consolidated Financial Statements and footnotes 
included in the Company's Annual Report on Form 10-K for the 
fiscal year ended November 1, 1997.  The results of operations 
for the three and nine month periods ended August 1, 1998 may 
not necessarily be indicative of the results for the fiscal 
year ending October 31, 1998 or any future period.

INVENTORIES
Inventories consisted of (in thousands):

                                            August 1,   November 1,
                                            1998        1997
                                            ----------- -----------
  Raw materials.....................            $1,991      $3,005
  Work-in-process...................             2,024       2,274
  Finished goods....................             1,479       3,781
                                            ----------- -----------
                                                $5,494      $9,060
                                            =========== ===========

Non-Recurring Charges
        During the third quarter ended August 1, 1998 the 
Company purchased substantially all of the assets of The 
Telephone Connection, Inc. ("TTC") for approximately $11.6 
million in cash, including transaction costs of approximately 
$400,000. The acquisition has been accounted for under the 
purchase method of accounting, and accordingly, accompanying 
condensed consolidated financial statements include the 
results of operations of TTC subsequent to the acquisition 
date.  During the third quarter the Company recorded a non-
recurring charge of $8.4 million, writing off the purchased 
in-process technology as the technology had not reached 
technological feasibility and had no alternative future use.  
The remainder of the purchased intangible assets will be 
amortized over their estimated useful lives, ranging from 36 
to 84 months.

        In December 1997, as disclosed in the Company's Form 10-
K, representatives of Lucent Technologies ("Lucent") 
informed the Company that they believed that the Company's 
products may infringe upon certain patents issued to Lucent, 
and that Lucent was seeking compensation for any past 
infringement by the Company.  The Company has continued to 
evaluate the assertions of Lucent and on August 25, 1998 
signed a letter of intent pursuant to which the Company 
expects to pay Lucent $9,200,000 during its fourth quarter 
to settle this dispute.  During the third quarter the 
Company accrued $7,600,000 million as additional costs, of 
which $5,600,000 was recorded as a non-recurring charge and 
$2,000,000, which is attributable to the CPE business, was 
recorded against the gain on the transaction and included in 
other income.  A portion of the proposed settlement amount 
totaling $1,600,000 will be reflected, when paid, as prepaid 
royalties and will be amortized to cost of goods sold over the 
future royalty period.

                During the quarter ended May 3, 1997 the Company 
recorded charges of approximately $3.6 million, consisting of 
$2.4 million in restructuring charges and $1.2 million in 
expenses associated with the termination of acquisition 
discussions with Voice-Tel Enterprises and Voice-Tel Network 
("Voice-Tel").  The restructuring charges noted above 
represent termination benefits for approximately 35 employees 
from all functions of the Company and costs associated with 
the resignation of the Company's president.

Other Income, Net
        On May 8, 1998, the Company licensed and sold certain 
Customer Premise Equipment ("CPE") business unit assets to 
Mitel Corporation ("Mitel") for a total purchase price of 
$26.8 million in cash, and Mitel assumed certain of the 
Company's liabilities.  The Company recorded a pre-tax gain 
of approximately $14.3 million on this sale.

        On June 29, 1997, the Company sold it's Text-to-Speech 
business to Learnout & Hauspie Speech Products ("L&H") for 
$5.0 million in L&H common stock.  The Company recorded a pre-
tax gain computed as the difference between the fair market 
value of the shares received at closing and the net carrying 
value of related Text-to-Speech tangible and intangible 
assets, of approximately $3.6 million during the third quarter 
and subsequently sold this L&H stock for an additional gain of 
approximately $0.3 million.  

Earnings (Loss) Per Share
        In February 1997, the Financial Accounting Standards 
Board issued Statement No. 128, "Earnings per Share," (FAS 
128), which was required to be adopted on December 31, 1997. 
 The Company adopted this statement in its first quarter 
ended January 31, 1998.  The following table sets forth the 
computation of basic and diluted earnings (loss) per share. 
 The quarter and nine months ended August 2, 1997 have been 
restated in accordance with FAS 128.



<TABLE>
<CAPTION>
                                                 Quarter Ended           Nine Months Ended
                                            -----------------------  -------------------------
                                            August 1,   August 2,    August 1,     August 2,
(in thousands, except per share data)       1998        1997         1998          1997
------------------------------------------- ----------- -----------  -----------   -----------
<S>                                         <C>         <C>          <C>           <C>
Numerator:
  Net income (loss)                            ($3,666)     $3,149     ($14,250)      ($2,475)
                                            =========== ===========  ===========   ===========
Denominator:
  Denominator for basic EPS -
    weighted average shares                      6,885       6,934        6,966         6,963
  Effect of dilutive securities:
    Employee stock options                         --           85          --            --
                                            ----------- -----------  -----------   -----------
  Denominator for diluted EPS -
    adjusted weighted average shares             6,885       7,019        6,966         6,963
                                            =========== ===========  ===========   ===========

Basic earnings (loss) per share                 ($0.53)      $0.45       ($2.05)       ($0.36)
                                            =========== ===========  ===========   ===========

Diluted earnings (loss) per share               ($0.53)      $0.45       ($2.05)       ($0.36)
                                            =========== ===========  ===========   ===========
</TABLE>

Options were outstanding during the three and nine 
month periods ended August 1, 1998 and the nine months ended 
August 2, 1997 but were excluded from the computation of 
diluted net loss per share because the effect in these 
periods would have been anti-dilutive.

Pro Forma Information
        The following pro forma summary represents the combined 
results of operations of the Company, plus the purchase of 
substantially all of the assets of TTC as adjusted to 
reflect the amortization of tangible and intangible assets 
acquired in the purchase, less the sale of the CPE business 
unit, as if each of these transactions had occurred at the 
beginning of fiscal 1997.  The pro forma summary results 
exclude the gain realized on the CPE sale transaction and 
exclude the non-recurring charge of the write-off of the 
purchased in-process technology acquired in the TTC asset 
purchase transaction.  This summary does not purport to be 
indicative of what operating results would have been had 
these transactions been made as of the beginning of fiscal 
1997 nor are they necessarily indicative of future operating 
results. 

(in thousands, except per share data)         Nine Months Ended
------------------------------------------- ----------- -----------
                                                  1998        1997
                                            ----------- -----------
Net revenue                                    $46,667     $51,885
Loss before income taxes                      ($22,454)   ($11,837)
Net loss                                      ($22,758)   ($12,063)
Basic and diluted loss per share                ($3.27)     ($1.73)
<PAGE>

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

The following discussion contains forward-looking 
statements regarding future events or the future financial 
performance of Centigram that involve risks and 
uncertainties. These statements include but are not limited 
to statements related to changes in Centigram's research and 
development and selling, general and administrative 
expenses, Centigram's effective tax rate, Centigram's 
expenditures for capital equipment, sufficiency of 
Centigram's cash reserves and settlement of Centigram's 
dispute with Lucent Technologies.  Actual results could 
differ materially from those anticipated in these forward-
looking statements as a result of certain factors, including 
those set forth in this Management's Discussion and Analysis 
of Financial Condition and Results of Operations under 
"Certain Trends and Uncertainties," and elsewhere herein.

        Centigram designs, manufactures and markets wireless 
and wireline messaging, enhanced services and communication 
systems that integrate voice and facsimile on the Company's 
communications server and provide access to this multimedia 
information through a telephone or a PC.  Centigram's 
applications all operate on common hardware and software 
platforms based on industry-standard hardware and software 
which is the Company's implementation of its Modular 
Expandable System Architecture (MESA). Centigram's system 
architecture enables a user generally to expand the capacity 
of a system in cost-effective increments from the Company's 
smallest to its largest system configuration. 

Centigram's systems can be integrated with wireline and 
wireless switches and paging terminal systems.  Such systems 
are used for switching telephone calls and integrating voice 
and facsimile messaging in a variety of service provider 
environments.  In addition, Centigram systems located at 
different sites can be linked together in a digital network.

Sale of CPE Business Unit 
On May 8, 1998, the Company licensed or sold certain 
assets to Mitel Corporation ("Mitel") and Mitel assumed 
certain liabilities related to the Company's customer 
premise equipment voicemail and unified messaging ("CPE") 
business for a purchase price of $26.8 million in cash.  As 
part of this sale ("CPE Sale"), the Company agreed until May 
8, 2001, not to compete in the CPE market and until April 
2000 to provide Mitel on an OEM basis large port count 
systems as required until Mitel develops this internal 
capability.  During the fourth quarter of fiscal 1998, Mitel 
commenced arbitration proceedings against the Company 
alleging that Centigram has not delivered all materials 
required to be delivered in connection with the CPE sale.  
Centigram believes the allegations are without merit and 
intends to vigorously defend against them.

Purchase of The Telephone Connection, Inc.
On June 24, 1998, the Company purchased substantially 
all the assets of The Telephone Connection, Inc. ("TTC") for 
approximately $11.6 million, including transaction costs of 
approximately $400,000.


Pro Forma Combined Condensed Statements of Operations 
The following pro forma statements represent the 
combined results of operations of the Company, plus the 
purchase of substantially all of the assets of TTC as 
adjusted to reflect the amortization of tangible and 
intangible assets acquired in the purchase, less the sale of 
the CPE business unit, as if each of these transactions had 
occurred at the beginning of fiscal 1997.  The pro forma 
summary results exclude the gain realized on the CPE sale 
transaction and exclude the non-recurring charge of the 
write-off of the purchased in-process technology acquired in 
the TTC asset purchase transaction.  This summary does not 
purport to be indicative of what operating results would 
have been had these transactions been made as of the 
beginning of fiscal 1997 nor are they necessarily indicative 
of future operating results.

<TABLE>
<CAPTION>
                                        Quarter Ended       Nine Months Ended
                                   ----------------------  ----------------------
(in thousands, except per          August 1,   August 2,   August 1,   August 2,
share data)                        1998        1997        1998        1997
---------------------------------------------  ----------  ----------  ----------
<S>                                <C>         <C>         <C>         <C>
Net revenue                          $18,323     $18,375     $46,667     $51,885

Cost and expenses:
  Costs of goods sold                  8,932       8,005      23,543      22,225
  Research and development             4,451       4,896      14,007      15,900
  Selling, general and 
     administrative                    9,930       9,453      28,110      27,608
  Non-recurring charges                5,600         --        5,600       3,563
                                   ----------  ----------  ----------  ----------
                                      28,913      22,354      71,260      69,296
                                   ----------  ----------  ----------  ----------
Operating loss                       (10,590)     (3,979)    (24,593)    (17,411)
Other income, net                        783       4,453       2,139       5,574
                                   ----------  ----------  ----------  ----------
Income (loss) before income taxes     (9,807)        474     (22,454)    (11,837)
Provision for income taxes               164         150         304         226
                                   ----------  ----------  ----------  ----------
Net income (loss)                    ($9,971)       $324    ($22,758)   ($12,063)
                                   ==========  ==========  ==========  ==========

Basic and diluted earnings
(loss) per share                      ($1.45)      $0.05      ($3.27)     ($1.73)
                                   ==========  ==========  ==========  ==========


Shares used for basic
earnings (loss) per share              6,885       6,934       6,966       6,963
                                   ==========  ==========  ==========  ==========

Shares used for diluted
earnings (loss) per share              6,885       7,019       6,966       6,963
                                   ==========  ==========  ==========  ==========
</TABLE>


Results of Operations
Net revenue for the third quarter of fiscal 1998 was 
$18.1 million, which was 33% lower than net revenue for the 
corresponding quarter of fiscal 1997.  The decrease in net 
revenue from the third quarter of 1997 reflects lower sales 
of small and large systems and MobileManager products offset 
in part by higher sales of upgrade and expansion products.  
This decrease was primarily due to reduced sales volumes, 
due to the CPE Sale.  As a result of the sale of the CPE 
business unit during the third quarter and other factors, 
the Company expects revenue for 1998 to be less than revenue 
for fiscal 1997.  Sales to international customers were 46% 
of revenues for the third quarter as compared to 47% in the 
similar period of 1997.  Net revenue for the first nine 
months of fiscal 1998 was $57.5 million, which was 28% lower 
than net revenue for the comparable 1997 period.  This 
decrease in revenue is attributable to essentially the same 
factors as noted above.  Sales to international customers 
were 47% of revenues for the first nine months of fiscal 
1998 as compared to 49% for the similar period of fiscal 
1997. 

        On a pro forma basis, net revenue was $18.3 million and 
$46.7 million versus $18.4 million and $51.9 million for the 
three and nine month periods of 1998 and 1997, respectively. 
 These decreases in net revenue reflect lower sales of large 
system products to international customers in Europe and the 
Pacific Rim.

Gross margin was 51.3% and 57.2% of net revenue in the 
third quarters of 1998 and 1997, respectively.  This 5.9% 
decrease from the prior year's third quarter reflects 
reduced sales of and lower margins in the Company's large 
systems products because of increased competitive pricing 
pressures, partially offset by a favorable mix of increased 
sales and margins of systems expansion products.  For the 
first nine months of fiscal 1998 the gross margin was 51.2% 
of net revenue as compared to 57.7% for the first nine 
months of fiscal 1997.  This 6.5% decrease reflects 
essentially the same factors as noted above in the 
comparison of the third quarter of fiscal 1998 to the third 
quarter of fiscal 1997.  See "Certain Trends and 
Uncertainties."

On a pro forma basis, gross margin was 51.3% and 50.4% 
versus 56.4% and 57.2% for the three and nine month periods 
of 1998 and 1997, respectively.  These decreases in year 
over year pro forma gross margins reflect essentially the 
same factors as noted above.

Research and development ("R&D") expenses decreased 18% 
in the third quarter of 1998 as compared to the 
corresponding quarter of 1997 and represented 22% and 18% of 
net revenue, respectively.  These reductions in R&D expenses 
reflect savings resulting from lower R&D staffing levels and 
related costs due to the CPE Sale.  For the first nine 
months of fiscal 1998, R&D spending was down 12% as compared 
to the comparable period in fiscal 1997 and represented 25% 
and 20% of net revenue, respectively.  These decreases in 
absolute dollars reflect lower payroll expenses and other 
costs resulting from lower staffing levels due to the CPE 
Sale.  The Company believes that ongoing development of new 
products and features is required to maintain and enhance 
its competitive position and accordingly, the Company 
expects to continue to invest in R&D.

On a pro forma basis, R&D expenses decreased $0.4 
million and $1.9 million for the three and nine month 
periods of 1998 and 1997, respectively.  These reductions in 
pro forma R&D spending reflect savings from lower R&D 
staffing levels and related costs.  Also, expenses were 
higher in fiscal 1997 resulting from the release in the 
first quarter of the Series 6 platform without comparable 
expenses in fiscal 1998.

        Selling, general and administrative ("SG&A") expenses 
for the third quarter were 16% below the SG&A expenses for 
the third quarter of fiscal 1997.  These decreases reflect 
primarily reduced sales, marketing and customer support 
expenses, including decreases in salaries and related costs 
due to the CPE sale and other reductions in average 
headcount.  SG&A expenses represented 54%, and 43% of net 
revenue the third quarter of 1998 and 1997, respectively.  
SG&A expenses for the first nine months of fiscal 1998 were 
down 7% from the prior year and represented 55% and 43% of 
net revenues for 1998 and 1997, respectively.  This decrease 
reflects the same factors as noted above. 

On a pro forma basis, SG&A expenses increased $0.5 
million for the three and nine month periods of 1998 and 
1997, respectively.  These increases reflect increased sales 
and marketing expenses.

Non-recurring charges were $14.0 million for the three 
and nine month periods of 1998 and zero and $3.6 million for 
the comparable periods in 1997.  For 1998 these non-
recurring charges consisted of $8.4 million for the write-
off of purchased in-process technology acquired in the 
purchase of The Telephone Connection, Inc. on June 24, 1998 
as this technology had not reached technological feasibility 
and had no alternative use and $5.6 million associated with 
the Company's patent dispute with Lucent Technologies.  For 
1997, these charges consisted of $2.4 million in 
restructuring expenses and $1.2 million associated with the 
termination of acquisition discussions with Voice-Tel 
Enterprises and Voice-Tel Network ("Voice-Tel").  The 
restructuring expenses represented termination benefits for 
approximately 35 employees from all functions of the Company 
and costs associated with the resignation of the Company's 
president.

Other income, net was $15.1 million and $16.4 million 
and $4.4 million and $5.5 million for the three and nine month 
periods of 1998 and 1997, respectively.  In addition to the 
Company's net investment income, other income in the 1998 
periods included the $14.3 million gain on the sale of the CPE 
business unit and in 1997 periods the $3.9 million gain on the 
sale of the Text-to-Speech business.

        The Company recorded a provision for income taxes for 
the three and nine month periods of fiscal 1998 and 1997 for 
anticipated foreign income tax liabilities.  No income tax 
benefit has been recorded for the losses incurred in the 
first nine months of fiscal 1998 and 1997, respectively, 
because realization of the deferred tax assets arising as a 
result of the losses sustained are dependent upon future 
taxable income, the amount and timing of which are 
uncertain.  Accordingly, a valuation allowance has been 
established to fully offset the deferred tax assets 
resulting from the losses incurred.

Liquidity and Capital Resources
        Cash and cash equivalents and short-term investments at 
August 1, 1998 were $52.3 million, increasing $5.9 million 
from the second quarter balance of $46.4 million and 
increasing $0.2 million from the year end balance.

        For the first nine months ended August 1, 1998 the net 
cash used for operating activities was $9.7 million.  Trade 
receivables decreased $2.0 million from the year-end balance 
primarily due to reduced revenues in the third quarter as 
compared to the last quarter in fiscal 1997.  Days sales 
outstanding (computed using quarterly revenues) were 78 days 
in the third quarter as compared to 68 days at end of fiscal 
1997.  This increase in days sales outstanding was primarily 
due to extended payment terms to certain international 
customers.  Inventory levels at August 1, 1998 were $0.7 
million lower than the year-end balance due to improved 
management of the Company's inventory stocking levels.  The 
Company expects investments in receivables and inventories 
will continue to represent a significant portion of working 
capital. 

        In December 1997, as disclosed in the Company's Form 
10-K, representatives of Lucent Technologies ("Lucent") 
informed the Company that they believed that the Company's 
products may infringe upon certain patents issued to Lucent, 
and that Lucent was seeking compensation for any past 
infringement by the Company.  The Company has continued to 
evaluate the assertions of Lucent and on August 25, 1998 
signed a letter of intent pursuant to which the Company 
expects to pay Lucent $9,200,000 during its fourth quarter 
to settle this dispute.

        During the first nine months ended August 1, 1998, the 
Company made capital expenditures of approximately $1.8 
million.  These expenditures consisted primarily of 
purchases of computer equipment, software, and engineering 
lab equipment.  The Company currently expects to spend 
approximately $3.0 million for capital equipment during 
fiscal 1998.  On April 15, 1997 the Company's Board of 
Directors authorized a stock repurchase program whereby up 
to one million shares of its Common Stock may be repurchased 
in the open market from time-to-time.  During the first nine 
months of 1998 the Company purchased under this repurchase 
program approximately 800,000 shares at a cost of $7.0 
million.  The Company presently believes, notwithstanding 
its accumulated deficit, that its existing cash and short-
term investments and amounts available under its line of 
credit, will be sufficient to support the Company's working 
capital, capital equipment purchase requirements, and stock 
repurchase program at least through fiscal 1999.

        The Company's principal sources of liquidity as of 
August 1, 1998 consisted of $52.3 million of cash and cash 
equivalents and short-term investments and $15.0 million 
available under the Company's bank line of credit which 
expires May 29, 1999.  This bank line requires the Company 
to maintain certain financial ratios, minimum working 
capital, minimum tangible net worth, and financial 
performance, and requires the bank's consent for the payment 
of cash dividends.  There were no borrowings outstanding 
under the bank line as of August 1, 1998.

Certain Trends and Uncertainties        
        The Company has in the past experienced and will likely 
in the future experience substantial fluctuations in 
quarterly operating results.  The Company generally has no 
long-term order commitments from its customers, and a 
significant portion of bookings and shipments in any quarter 
have historically occurred near the end of the quarter.  
Accordingly, the Company has historically operated with very 
little backlog, and net revenue has been difficult to 
predict. In addition, the portion of backlog shippable in 
the next quarter varies over time.  As a result, revenue in 
future quarters will depend largely on the level of orders 
received during such quarters. 

        If new order bookings do not meet expected levels, or 
if the Company experiences delays in shipments at the end of 
a quarter, operating results will be adversely affected, and 
these developments may not become apparent to the Company 
until near or at the end of a quarter.  Net revenue can also 
be affected by product sales mix, distribution mix, the size 
and timing of customer orders and shipments, customer 
returns and reserves provided therefor, competitive pricing 
pressures, the effectiveness of key distributors and the 
Company's sales force in selling the Company's products, 
changes in distributor inventory levels, the ability of the 
Company's joint marketing partners to ship products during 
the quarter, the timing of new product introductions by the 
Company and its competitors, regulatory approvals, and the 
availability of components for the Company's products, each 
of which is difficult to predict accurately.  Each of such 
factors has in the past affected the Company's revenue.  The 
Company has in the past experienced higher than usual 
headcount turnover which has had an adverse effect on the 
Company's booking levels. There can be no assurance that 
such turnover will not continue in future periods.  Any 
failure by the Company to attract, retain and train 
additional sales and other personnel could have a material 
adverse effect on the Company's business and results of 
operations.

        A significant portion of the Company's net revenue is 
attributable to a limited number of customers.  The 
Company's top five customers, representing a combination of 
major distributors and service providers, accounted for 
approximately 58% and 31% of the Company's net revenue in 
the three and nine month periods of fiscal 1998 and the 34% 
and 27% for the similar periods in fiscal 1997, 
respectively, although the Company's five largest customers 
were not the same in the two periods.  The Company has no 
long-term order commitments from any of its customers.  Any 
material reduction in orders from one or more of such 
customers or the cancellation or deferral of any significant 
portion of backlog could have an adverse effect on net 
revenue and operating results.  Such concentration of sales 
typically results in a corresponding concentration of 
accounts receivable.  Although the Company has established 
reserves for uncollectible accounts, the inability of any 
large customer to pay the Company could have a material 
adverse impact on the Company's financial position, results 
of operations and cash flows.

        Approximately 46% of the Company's sales in the third 
fiscal quarter ended August 1, 1998 consisted of sales 
outside of the United States.  The Company's international 
sales are subject to a number of additional risks generally 
associated with international sales, including the effect on 
demand for the Company's products in international markets 
as the results of any strengthening or weakening of the U.S. 
dollar, the effect of currency fluctuations on consolidated 
multinational financial results, state imposed restrictions 
on the repatriation of funds, import and export duties and 
restrictions, the need to modify products for local markets, 
and the logical difficulties of managing multinational 
operations.  In particular, the Company's sales in Asia have 
been adversely affected in recent quarters by financial 
difficulties in that region and may be so adversely affected 
in the future.

        The Company's gross margin can be affected by a number 
of factors, including changes in product configuration and 
mix including the volume of OEM products, distribution 
channel and customer mix, cost and availability of parts and 
components, royalty obligations to suppliers of licensed 
software, provisions for warranty, retrofits, and excess and 
obsolete inventory, customer returns, and competitive 
pressures on pricing.  The Company has experienced 
increasing competitive pricing pressure in its markets and 
expects this pricing pressure to continue.  Further, 
distributors purchase products at discounts, and the 
Company's margins can therefore vary depending upon the mix 
of distributor and direct end user sales in any particular 
fiscal period.  While the Company anticipates that its sales 
mix will continue to fluctuate in future periods, with the 
sale of the CPE business unit in the third quarter of 1998, 
the Company anticipates selling an increasing percentage of 
sales through direct sales rather than through distribution.

The Company's future success will depend in part upon 
the ability of the Company to continue to introduce new 
features and products as the Company's markets evolve, new 
technologies become available, and customers demand 
additional functionality.  The Company's competitors 
continue to add functionality to their products, and any 
failure by the Company to introduce in a timely manner new 
products and features that meet customer requirements would 
adversely affect the Company's operating results and cash 
flows.  The Company's ability to develop such new features 
and products depends in large measure on its ability to hire 
and retain qualified technical talent and outside 
contractors in highly competitive markets for such services. 
 There can be no assurance that the Company's product 
development efforts will be successful, or that it will be 
able to introduce new products in a timely manner.  Any 
material additional delays in the introduction and market 
acceptance of such products would be adverse to the 
Company's business.  Moreover, customers' expectations of 
the introduction of new products by the Company or its 
competitors can adversely affect sales of current products. 
 In addition, upon the introduction of new products, the 
Company could be subject to higher customer returns with 
respect to prior generations of products, which could 
adversely affect the Company's financial position, operating 
results and cash flows.
        The Company presently uses third parties to perform 
printed circuit board and subsystem assembly.  In addition, 
although the Company has not experienced significant 
problems with third-party manufacturers in the past, there 
can be no assurance that such problems will not develop in 
the future.  Although the Company generally uses standard 
parts and components for its products, certain 
microprocessors, line cards, application cards and other 
semiconductor devices and other components are available 
from sole sources.  Other components, including power 
supplies, disk drives, certain other semiconductor devices 
and subcontracted line card assemblies, are presently 
available or acquired from a single source or from limited 
sources.  The Company has been notified by suppliers that 
certain components will no longer be manufactured.  To date, 
the Company has been able to obtain adequate supplies of 
these components in a timely manner from existing sources 
or, when necessary, from alternative sources of supply 
although such alternatives have resulted in increased costs 
to the Company.  However, the inability to develop such 
alternative sources if and as required in the future, to 
obtain sufficient sole or limited source components as 
required, or to locate alternatives to discontinued parts 
would have a material adverse affect on the Company's 
operating results and cash flows.  In addition, the 
Company's products are dependent on the QNX software 
operating system, a multitasking, real-time operating system 
for Intel microprocessor-based computers.  In future 
periods, the Company's products may become increasingly 
dependent on software licensed from third party suppliers. 
There can be no assurance such licenses will continue to be 
available to the Company as needed or at commercially 
reasonable prices.
        In addition, a number of other companies, including 
competitors of the Company, hold patents in the same general 
area as the technology used by the Company.  The Company 
from time to time has received, and may receive in the 
future, letters alleging infringement of patent rights by 
the Company's products.  For example, in December 1997, 
representatives of Lucent informed the Company that they 
believed that the Company's products may infringe upon 
certain patents issued to Lucent, and that Lucent was 
seeking compensation for any past infringement by the 
Company.  The Company has continued to evaluate the 
assertions of Lucent, and on August 25, 1998 signed a letter 
of intent to settle this dispute.  Lucent, or any other 
third party, alleging infringement, could seek an injunction 
prohibiting the Company from selling some or all of its 
products, which would have an immediate, adverse impact in 
the Company's business, financial condition and results of 
operations.  There can be no assurance that the Company 
would prevail in any litigation to enjoin the Company from 
selling its products on the basis of such alleged 
infringement, or that the Company would be able to license 
any valid and infringed patents on reasonable terms, or at 
all.
        The Company has conducted a review of its internal 
computer systems, as well as the Company's product line, to 
identify the systems that could be affected by the "Year 
2000" issue and has developed an implementation plan to 
resolve the issue.  The Year 2000 problem is the result of 
computer programs being written using two digits (rather 
than four) to define the applicable year.  Software programs 
that have time-sensitive software may recognize a date using 
"00" as the year 1900 rather than the year 2000.  This could 
result in a major system failure or miscalculations.  If 
modifications are not made in a timely manner, the Company 
or its customers may be unable to implement appropriate Year 
2000 solutions, which could have a material adverse affect 
on the Company's business, financial condition or results of 
operations.
        In recent years, stock markets have experienced extreme 
price and volume trading volatility.  This volatility has 
had a substantial effect on the market prices of securities 
of many high technology companies for reasons frequently 
unrelated to the operating performance of the specific 
companies.  These broad markets fluctuations may adversely 
affect the market price of the Company's common stock.  In 
addition, the trading price of the Company's common stock 
could be subject to wide fluctuations in response to 
quarter-to-quarter variations in operating results, 
announcements of new products or technological innovations 
by the Company or its competitors, and general conditions in 
the computer and communications industries.



PART II - OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

        (a)     Exhibits.

                27.1 Financial Data Schedule.

        (b)     Reports on Form 8-K.

                May 8, 1998, sale of CPE business unit to Mitel; 
                amended to include pro forma financial statements, 
                with an 8-K/A on July 15, 1998.

                June 1, 1998, disclosing the effect of adoption of 
                FAS128, "Earnings per Share" on the Annual Report 
                on Form 10-K for the fiscal year ended November 1, 
                1997 and prior periods.

                June 24, 1998, purchase of The Telephone 
                Connection, Inc.; amended to include pro forma 
                financial statements, with an 8-K/A on September 
                2, 1998.



<PAGE>





                                    SIGNATURES

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

                             CENTIGRAM COMMUNICATIONS CORPORATION
                                         (Registrant)

Date:  September 14, 1998          By:    /s/ Robert L. Puette      

                                              Robert L. Puette
                                              President and Chief Executive 
                                              Officer



Date:  September 14, 1998          By:    /s/ Thomas E. Brunton 

                                              Thomas E. Brunton 
                                              Sr. Vice President and
                                              Chief Financial Officer