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

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                              ____________________

                                    FORM 10-Q

(Mark one)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 For the quarterly period ended December 26, 1998
                                           -----------------

                                       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 1-7352
                         ______________________________

                            Data General Corporation
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                    04-2436397
-------------------------------         --------------------------------------- 
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
 incorporation or organization)          


4400 Computer Drive, Westboro, Massachusetts                   01580
--------------------------------------------                ----------          
 (Address of principal executive offices)                   (Zip Code)

        Registrant's telephone number, including area code (508) 898-5000

Former name, former address and former fiscal year if changed since last report:
                                 Not Applicable

                         ______________________________

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
                                       ---      ---

Number of  shares  outstanding  of each of the  registrant's  classes  of common
stock, as of January 22, 1999:

    Common Stock, par value $.01                                 50,152,458
    ----------------------------                            ------------------
       (Title of each class)                                (Number of shares)


================================================================================
<PAGE>



PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements.
<TABLE>

DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

<CAPTION>
                                                                Quarter Ended  
                                                            --------------------
                                                             Dec. 26,   Dec. 27,
in thousands, except per share amounts                         1998       1997  
--------------------------------------------------------------------------------
<S>                                                         <C>         <C>
Revenues:
    Product.............................................    $268,836    $267,177
    Service.............................................      96,753      98,098
                                                            --------    --------
         Total revenues.................................     365,589     365,275
                                                            --------    --------

Costs and expenses:
    Cost of product revenues............................     184,217     189,171
    Cost of service revenues............................      60,831      60,176
    Research and development............................      28,873      27,448
    Selling, general, and administrative................      86,475      84,371
                                                            --------    --------
         Total costs and expenses.......................     360,396     361,166
                                                            --------    --------

Income from operations..................................       5,193       4,109
Interest income.........................................       3,019       3,509
Interest expense........................................       3,776       3,620
Other income ...........................................       5,372         -- 
                                                            --------    --------

Income before income taxes..............................       9,808       3,998
Provision (benefit) for income taxes....................      (6,700)        500
                                                            --------    --------
Net income..............................................    $ 16,508    $  3,498
                                                            ========    ========

Basic net income per share

    Net income per share................................       $0.33       $0.07
                                                            ========    ========
    Weighted average shares outstanding.................      49,801      48,640
                                                            ========    ========

Diluted net income per share

    Net income per share................................       $0.32       $0.07
                                                            ========    ========
    Weighted average shares outstanding, including
    common stock equivalents, where applicable..........      51,236      50,676
                                                            ========    ========
<FN>
No cash dividends have been declared or paid since inception.

The  accompanying Notes to Condensed  Consolidated  Financial  Statements are an
integral part of these financial statements.
</FN>
</TABLE>

<PAGE>



DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>

                                                             (Unaudited)
                                                               Dec. 26,     Sept. 26,
dollars in thousands, except par value                           1998          1998          
--------------------------------------------------------------------------------------
<S>                                                            <C>         <C>
Assets
Current assets
    Cash and temporary cash investments.................     $  130,289    $  158,220
    Marketable securities...............................        157,184       160,354
    Receivables, net....................................        308,378       307,428
    Inventories.........................................        134,181       141,639
    Other current assets................................         31,170        28,320
                                                             ----------    ----------
         Total current assets...........................        761,202       795,961

Property, plant, and equipment, net.....................        185,626       180,454

Other assets............................................         93,034        88,649
                                                             ----------    ----------
         Total assets...................................     $1,039,862    $1,065,064
                                                             ==========    ==========

Liabilities and stockholders' equity
Current liabilities
    Accounts payable....................................     $  126,127    $  160,940
    Other current liabilities...........................        267,807       269,774
                                                             ----------    ----------
         Total current liabilities......................        393,934       430,714
                                                             ----------    ----------
Long-term debt..........................................        212,750       212,750
                                                             ----------    ----------
Other liabilities.......................................         28,324        36,645
                                                             ----------    ----------

Stockholders' equity
  Common stock, $0.01 par value
       Outstanding - 49,984,000 shares at Dec. 26, 1998
       and 49,689,000 shares at Sept. 26, 1998 (net of
       deferred compensation of $19,494 at Dec. 26, 1998
       and $15,444 at Sept. 26, 1998)...................        629,377       626,137
Accumulated deficit.....................................       (215,468)     (231,976)
Unrealized gains on marketable securities...............          9,276         8,513
Equity adjustment for minimum pension liability.........         (6,252)       (6,252)
Cumulative translation adjustment.......................        (12,079)      (11,467)
                                                             ----------    ----------
         Total stockholders' equity.....................        404,854       384,955
                                                             ----------    ----------

         Total liabilities and stockholders' equity.....     $1,039,862    $1,065,064
                                                             ==========    ==========
<FN>

The  accompanying Notes to Condensed  Consolidated  Financial  Statements are an
integral part of these financial statements.
</FN>
</TABLE>

<PAGE>

<TABLE>
DATA GENERAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
                                                                         Quarter Ended
                                                                     ----------------------
                                                                      Dec. 26,     Dec. 27,
in thousands                                                            1998         1997   
-------------------------------------------------------------------------------------------
<S>                                                                   <C>            <C>
Cash flows from operating activities
    Net income...................................................    $ 16,508     $  3,498
    Adjustments to reconcile net income to
     net cash used by operating activities
         Depreciation............................................      19,805       19,756
         Amortization of capitalized software development costs..       4,540        6,403
         Gain on sale of marketable securities ..................      (5,372)          --
         Other non-cash items, net...............................      (1,720)         184
         Change in operating assets and liabilities..............     (34,630)     (58,744)
                                                                     --------     --------

         Net cash used by operating activities...................        (869)     (28,903)
                                                                     --------     --------

Cash flows from investing activities
    Expenditures for property, plant, and equipment..............     (29,165)     (31,361)
    Net proceeds from the sales (purchases) of marketable
      securities.................................................       8,834       (4,494)
    Capitalized software development costs ......................      (8,043)     (10,702)
                                                                     --------     --------

         Net cash used by investing activities...................     (28,374)     (46,557)
                                                                     --------     --------

Cash flows from financing activities
    Cash provided from stock plans...............................       1,541          606
                                                                     --------     --------

         Net cash provided from financing activities.............       1,541          606
                                                                     --------     --------

Effect of foreign currency rate fluctuations
 on cash and temporary cash investments..........................        (229)        (613)
                                                                     --------     --------

Decrease in cash and temporary cash investments..................     (27,931)     (75,467)
Cash and temporary cash investments - beginning of period........     158,220      216,814
                                                                     --------     --------
Cash and temporary cash investments - end of period..............    $130,289     $141,347
                                                                     ========     ========


Supplemental disclosure of cash flow information
    Interest paid................................................    $  6,714     $  6,437
    Income taxes paid............................................    $  1,825     $    263
<FN>

The  accompanying Notes to Condensed  Consolidated  Financial  Statements are an
integral part of these financial statements.
</FN>
</TABLE>

<PAGE>

DATA GENERAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>

Note 1. Consolidated Balance Sheet Details
<CAPTION>
                                                                        Dec. 26,      Sept. 26,
in thousands                                                              1998           1998
-------------------------------------------------------------------------------------------------
<S>                                                                   <C>             <C>
Inventories
    Raw materials................................................     $  4,130        $  1,420
    Work in process..............................................       63,880          64,200
    Finished systems.............................................       42,381          50,632
    Field engineering parts and components.......................       23,790          25,387
                                                                      --------        --------
                                                                      $134,181        $141,639
                                                                      ========        ========

Property, plant, and equipment
    Property, plant, and equipment...............................     $657,653        $641,612
    Accumulated depreciation.....................................     (472,027)       (461,158)
                                                                      --------        --------
                                                                      $185,626        $180,454
                                                                      ========        ========
</TABLE>



Note 2.  Accounting Policies

     In the first  quarter of fiscal  1998,  the Company  adopted  Statement  of
Financial  Accounting  Standards  ("SFAS") Number 128, "Earnings per Share." The
following  data show the amounts  used in  computing  earnings per share and the
effect on  income  and the  weighted  average  number  of shares of  potentially
dilutive common stock.

<TABLE>
                                                                           Quarter Ended        
                                         ---------------------------------------------------------------------------------- 
                                                     December 26, 1998                          December 27, 1997
                                         -------------------------------------     ----------------------------------------
                                           Income        Shares      Per-Share        Income         Shares       Per-Share
in thousands, except per share amounts   (Numerator)  (Denominator)   Amount       (Numerator)   (Denominator)     Amount
                                         -----------  -------------  ---------     -----------   -------------    ---------
<S>                                        <C>            <C>           <C>           <C>             <C>            <C>
Basic Earnings Per Share

Net income available to
  common stockholders                      $16,508       49,801         $0.33         $ 3,498         48,640         $0.07

Effect of Dilutive Securities

 Stock Options                                 --         1,435                           --           2,036
                                           -------       ------                       -------         ------

Diluted Earnings Per Share

Net income available to
  common stockholders and
  assumed conversions                      $16,508       51,236         $0.32         $ 3,498         50,676         $0.07
                                           =======       ======         =====         =======         ======         =====

<FN>
     For the quarters ended December 26, 1998 and December 27, 1997, the assumed
conversion  of the  convertible  debentures,  giving  effect to the  incremental
shares and the adjustment to reduce interest  expense,  is anti-dilutive and has
therefore been excluded from the computation.
</FN>
</TABLE>



<PAGE>


Note 3.  Basis of Presentation and Use of Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from these estimates.

     In  the  opinion  of  management,   the  accompanying  unaudited  condensed
consolidated financial statements reflect all adjustments,  consisting of normal
recurring accruals, considered necessary for a fair presentation.  The Company's
accounting  policies  are  described  in the  Notes  to  Consolidated  Financial
Statements in the Company's  1998 Annual  Report.  The results of operations for
the quarter  ended  December  26,  1998 are not  necessarily  indicative  of the
results of the entire fiscal year.


Note 4.  Restructuring Charge

     During  fiscal  year  1998,   the  Company   approved  and   implemented  a
restructuring  program designed to strengthen the Company's focus on storage and
enterprise  computing  solutions and reduce costs in  non-strategic  areas.  The
restructuring was adopted in response to the increasing price competition within
the computer hardware industry.

     Accordingly,  during  fiscal year 1998,  the  Company  recorded a charge of
approximately  $135  million  related to the  restructuring  program and certain
asset  write-downs  resulting  from the plan.  A summary of the related  accrued
liability balance at December 26, 1998 is as follows:

<TABLE>

--------------------------------------------------------------------------------------------------------------------------
                                                                                     Less:
                                                         Sept. 26, 1998         Cash payments and        Dec. 26, 1998
 in millions                                                Balance             Asset write-downs           Balance
--------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                      <C>                      <C>            
Employee termination benefits                               $ 27.0                  $ 5.6                  $ 21.4
Asset write-downs                                              6.7                    1.0                     5.7
Lease abandonments                                            10.6                    0.4                    10.2
Other exit costs                                               3.7                    0.6                     3.1
                                                            ------                  -----                  ------ 
          Total                                             $ 48.0                  $ 7.6                  $ 40.4
                                                            ======                  =====                  ====== 
--------------------------------------------------------------------------------------------------------------------------

</TABLE>

     The provision  included severance benefits for approximately 480 employees,
of which  approximately 65% were based in the United States and the remainder in
Europe and Asia/Pacific. Of the 480 employees identified, approximately 398 were
terminated as of December 26, 1998. The remaining  terminations  are expected to
be  completed  during the first half of calendar  1999.  Asset  write-downs  are
composed  primarily  of  fixed  assets,  including  leasehold  improvements  and
demonstration  equipment  which are being  disposed  of in  connection  with the
restructuring  program.  The provision for lease abandonments relates to vacated
lease  properties,  mainly in Europe and Asia, and includes a change in estimate
of $1.3 million for lease abandonment  costs accrued in prior years.  There were
no material  changes in  estimates to prior  provisions  or  additional  charges
recorded during the three-month period ended December 26, 1998.

<PAGE>

Note 5.  Comprehensive Income

     In the first quarter of fiscal 1999,  the Company  adopted SFAS Number 130,
"Reporting  Comprehensive  Income."  This  statement  establishes  standards for
reporting and displaying  comprehensive  income and its components in a full set
of  general  purpose   financial   statements.   This  statement   requires  the
classification  of items of comprehensive  income by their nature in a financial
statement and the accumulated balance of other  comprehensive  income separately
from retained  earnings and additional  paid-in capital in the equity section of
the balance sheet. The Company's total comprehensive income is as follows:


<TABLE>
                                                                 Quarter Ended
                                                        -----------------------------
                                                           Dec. 26,          Dec. 27,
in thousands                                                 1998              1997
-------------------------------------------------------------------------------------
<S>                                                         <C>                 <C>
Net income                                                $ 16,508          $  3,498
Other comprehensive income (expense):

    Unrealized gains on marketable securities...........       763               675
    Cumulative translation adjustment...................      (612)             (377)
                                                          --------          --------

Total other comprehensive income........................       151               298
                                                          --------          --------

Total comprehensive income..............................  $ 16,659          $  3,796
                                                          ========          ========

</TABLE>


<PAGE>

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



Results of Operations

     The Company  reported net income of $16.5  million for the current  quarter
ended  December 26, 1998,  compared with net income of $3.5 million for the same
period of the prior  year.  The  current  quarter  net  income of $16.5  million
includes a benefit for taxes of $7.5 million  resulting  from a settlement  with
the Internal  Revenue  Service  related to taxes paid during the Company's  1983
through 1991 fiscal years, and a gain of $5.4 million resulting from the sale of
an investment in marketable securities.

<TABLE>

Revenues (in millions)

-------------------------------------------------------------------------------------
                                                         Quarter ended
                                           ------------------------------------------
                                             12/26/98        Change         12/27/97
                                             --------        ------         --------
<S>                                           <C>               <C>             <C>
Product                                       $268.8            1%           $267.2
  % of Total Revenues                            74%                            73%

Service                                         96.8           (1%)            98.1
  % of Total Revenues                            26%                            27%

Total                                         $365.6            --           $365.3
-------------------------------------------------------------------------------------

</TABLE>

     In the fiscal quarter ended December 26, 1998, product revenues were $137.7
million  from the  Company's  AViiON  family  of open  systems  server  products
compared with product revenues of $133.3 million in the comparable period of the
prior  year.  In  the  current  quarter,   revenues  from  the  Company's  Intel
processor-based  AViiON  systems  increased 17% to $126.7 million as compared to
the comparable quarter in fiscal 1998.  Revenues from AViiON systems running the
Microsoft  Windows NT  operating  system  increased by  approximately  36% while
revenues from the  Motorola-based  AViiON systems  declined by 55% compared with
the same period of the prior year. The Company  anticipates  that the percentage
of  server  product  revenues  generated  by the  Intel  processor-based  AViiON
products  will  continue to increase in fiscal  1999,  while the  Motorola-based
AViiON  system  revenues are expected to continue to decline.  Product  revenues
from the Company's  CLARiiON storage systems increased 9% to $113.7 million from
the comparable prior-year period and accounted for 42% of total product revenues
in the current  quarter.  Within the CLARiiON  family of storage  systems,  full
fibre channel  revenues were nearly six times the full fibre channel revenues of
the quarter ended December 27, 1997 and  represented  approximately  one half of
total CLARiiON revenues in the current quarter. The Company anticipates that the
percentage  of  revenues  from full fibre  channel  products  will  continue  to
increase.  CLARiiON is sold primarily through the Company's  original  equipment
manufacturer (OEM) and distributor channels;  thus sales in any given period are
subject  to sales  cycles  and  inventory  levels  of the  Company's  customers.
CLARiiON  product  revenues  have  been  concentrated  in a  limited  number  of
customers, with a significant portion of the Company's CLARiiON product sales to
a single OEM  customer.  Product  revenues  from  personal  computers  and other
equipment  decreased 33% from the same period in the prior year and  represented
6% of  total  product  revenues  compared  to 9% for the  comparable  prior-year
period.  Product revenues from VALiiANT,  the Company's  contract  manufacturing
operation,  represented  less than 1% of total product  revenues for the quarter
ended December 26, 1998.

<PAGE>

<TABLE>

Revenues by Geographic Marketplace
-------------------------------------------------------------------------------------
                                Percentage of                  Percentage Change of
                            Consolidated Revenues                 $ of Revenues
                      --------------------------------     --------------------------
                               Quarter ended                  12/26/98 - 12/27/97
                      --------------------------------     --------------------------
                         12/26/98        12/27/97                 Quarter ended
                      --------------------------------     --------------------------
<S>                         <C>             <C>                       <C>
Domestic
--------
Product                     60%             60%                        1%
Service                     58%             61%                       (6%)
Total                       60%             60%                       (1%)

Europe
------
Product                     25%             24%                        4%
Service                     33%             30%                       11%
Total                       27%             26%                        6%

Other International
-------------------
Product                     15%             16%                       (4%)
Service                      9%              9%                      (10%)
Total                       13%             14%                       (5%)
-------------------------------------------------------------------------------------

</TABLE>

     The increase in domestic  product  revenues for the current  quarter  ended
December 26, 1998 was primarily a result of increased  shipments of CLARiiON and
Intel  processor-based  AViiON  systems,  which was partly  offset by  decreased
shipments of Motorola-based  AViiON systems and VALiiANT products.  The increase
in European  product  revenues,  including  U.S.  direct export  sales,  for the
current  quarter was mainly  attributable  to  increases  in CLARiiON and AViiON
product  revenues,  which was partly  offset by decreases in VALiiANT and PC and
other  equipment  product  revenues.   Other  international   product  revenues,
including  U.S.  direct export sales,  for the current  quarter  decreased 4% as
compared with the same fiscal quarter in 1998.

     In the service business,  the Company experienced a 3% decrease in contract
maintenance  revenues in the current quarter ended December 26, 1998 as compared
with the same period in fiscal 1998 due to a decline in the contract maintenance
service  base.  This  decrease  was  partially   offset  by  a  3%  increase  in
professional  service revenues in the current quarter ended December 26, 1998 as
compared with the quarter ended December 27, 1997. Professional service revenues
represent approximately 25% of total service revenues in the current quarter.

     In Europe, the effect of foreign exchange accounted for approximately 3% of
the 6% increase  in total  revenues  for the current  quarter as compared to the
quarter ended December 27, 1997.

<PAGE>

<TABLE>

Cost of Revenues (in millions)

-------------------------------------------------------------------------------------
                                                         Quarter ended
                                           ------------------------------------------
                                           12/26/98          Change         12/27/97
                                           --------          ------         ---------
<S>                                          <C>               <C>              <C>
Product                                     $184.2            (3%)           $189.2
 % of Product Revenues                         69%                              71%

Service                                       60.8             1%              60.2
 % of Service Revenues                         63%                              61%

Total Cost of Revenues                      $245.0            (2%)           $249.4
 % of Total Revenues                           67%                              68%
-------------------------------------------------------------------------------------

</TABLE>

     The decrease in the product cost as a percentage  of product  revenues from
the  comparable  prior-year  period  was  primarily  the  result of the shift in
product mix to high-end NUMA technology  based AViiON  servers.  The increase in
the service cost as a  percentage  of service  revenues for the current  quarter
ended  December  26,  1998 was  primarily  caused  by the  decline  in  contract
maintenance revenues.

Operating Expenses (in millions)

<TABLE>
-------------------------------------------------------------------------------------
                                                         Quarter ended
                                           ------------------------------------------
                                           12/26/98         Change          12/27/97
                                           --------         ------          ---------
<S>                                           <C>              <C>              <C>
Research & Development                       $28.9             5%             $27.4
  % of Total Revenues                           8%                               8%

Selling, general & administrative            $86.5             2%             $84.4
  % of Total Revenues                          24%                              23%

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

</TABLE>

     The Company continues to focus its research and development  efforts on its
core business technology:  multi-user computer systems and mass storage devices.
In  the  current  three-month   period,   gross  expenditures  on  research  and
development and software development before capitalization were $36.9 million, a
decrease  of 3%  from  $38.1  million  for  the  comparable  prior-year  period.
Continued  increases in research and development  expenditures in CLARiiON fibre
channel  products  and  NUMA  technology,  were  offset,  in  part,  by  savings
associated from the Company's  restructuring  program implemented in fiscal year
1998.

     For the current  quarter ended  December 26, 1998,  selling,  general,  and
administrative  expenses increased by 2% over the comparable prior-year quarter.
The increase is a result of  increased  sales  marketing  efforts in the storage
business,  partially offset by savings in the server business resulting from the
Company's fiscal 1998 restructuring program.

     During  fiscal  year  1998,   the  Company   approved  and   implemented  a
restructuring  program designed to strengthen the Company's focus on storage and
enterprise  computing  solutions and reduce costs in  non-strategic  areas.  The
restructuring was adopted in response to the increasing price competition within
the computer hardware industry.

<PAGE>

     Accordingly,  during  fiscal year 1998,  the  Company  recorded a charge of
approximately  $135  million  related to the  restructuring  program and certain
asset  write-downs  resulting  from the plan.  A summary of the related  accrued
liability balance at December 26, 1998 is as follows:

<TABLE>

--------------------------------------------------------------------------------------------------------------------------
                                                                                     Less:
                                                         Sept. 26, 1998         Cash payments and        Dec. 26, 1998
 in millions                                                Balance             Asset write-downs           Balance
--------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                      <C>                      <C>            
Employee termination benefits                               $ 27.0                  $ 5.6                  $ 21.4
Asset write-downs                                              6.7                    1.0                     5.7
Lease abandonments                                            10.6                    0.4                    10.2
Other exit costs                                               3.7                    0.6                     3.1
                                                            ------                  -----                  ------
          Total                                             $ 48.0                  $ 7.6                  $ 40.4
                                                            ======                  =====                  ======

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

</TABLE>


     The provision  included severance benefits for approximately 480 employees,
of which  approximately 65% were based in the United States and the remainder in
Europe and Asia/Pacific. Of the 480 employees identified, approximately 398 were
terminated as of December 26, 1998. The remaining  terminations  are expected to
be  completed  during the first half of calendar  1999.  Asset  write-downs  are
composed  primarily  of  fixed  assets,  including  leasehold  improvements  and
demonstration  equipment  which are being  disposed  of in  connection  with the
restructuring  program.  The provision for lease abandonments relates to vacated
lease  properties,  mainly in Europe and Asia, and includes a change in estimate
of $1.3 million for lease abandonment  costs accrued in prior years.  There were
no material  changes in  estimates to prior  provisions  or  additional  charges
recorded during the three-month period ended December 26, 1998.

     During fiscal year 1995, the Company recorded a restructuring charge of $43
million. As of December 26, 1998 the remaining reserves of $3.1 million from the
1995  restructuring  charge are for excess vacant rental  properties,  primarily
located in Europe.

     At December 26, 1998, the number of employees totaled  approximately 4,700,
which is unchanged  from the number of  employees  at  September  26, 1998 and a
decrease of approximately 400 employees from December 27, 1997.

     Interest  income for the current  quarter was $3.0 million,  a 14% decrease
from $3.5 million for the comparable  period of fiscal 1998, due to lower levels
of invested cash. Interest expense for the current quarter, primarily related to
interest  expense  and  amortization  of  issuance  costs  associated  with  the
Company's 6% Convertible  Subordinated  Notes due 2004, was  approximately  $3.8
million,  a 4% increase  from $3.6 million for the  comparable  period of fiscal
1998.  Other income for the current quarter includes a gain of $5.4 million from
the sale of  equity  investments  in  non-affiliated  companies  which  had been
previously carried at cost.

     The current  quarter income tax benefit of $6.7 million  includes a gain of
$7.5 million  resulting from a settlement with the Internal  Revenue Service for
taxes paid during the Company's 1983 through 1991 fiscal years. The remainder of
the current  quarter tax  provision  relates  primarily to foreign,  state,  and
federal  alternative  minimum taxes. The Company has a valuation allowance which
offsets  substantially  all  deferred  tax assets as of  December  26,  1998 and
December 27, 1997. The amount of the deferred tax assets  considered  realizable
is subject to change based on estimates of future income during the carryforward
period.  The Company  will assess the need for the  valuation  allowance at each
balance sheet date based on all  available  evidence and may adjust the level of
the valuation allowance, if appropriate.

<PAGE>

Financial Condition

     Cash and  temporary  cash  investments  as of December 26, 1998 were $130.3
million,  a decrease of $27.9  million from the end of fiscal 1998.  At the same
date, the Company held $157.2 million in marketable  securities,  a net decrease
of $3.2 million from the end of fiscal 1998. In total,  cash and temporary  cash
investments  along with  marketable  securities  decreased $31.1 million for the
current  three-month  period.  The  decrease  was  mainly  attributable  to  the
purchases of equipment required for the Company's server and storage businesses,
payments reducing employee and vendor related accruals,  and payments related to
the restructuring  program  implemented in June 1998. The marketable  securities
held,  which  supplement  cash and temporary  cash  investments,  include United
States  treasury  bills and notes,  notes  issued by U.S.  government  agencies,
commercial  paper and  certificates  of  deposit,  as well as equity  securities
recorded  at their  fair  market  value  of  $10.5  million  and  classified  as
available-for-sale. The unrealized gain on marketable securities of $9.3 million
is recorded as a separate component of stockholders'  equity. During the current
three-month  period,  the Company recorded a gain of $5.4 million on the sale of
an  investment  in marketable  securities.  Net cash used by operations  for the
three months ended  December 26, 1998  totaled $0.9  million;  expenditures  for
property,  plant,  and equipment  totaled $29.2  million;  capitalized  software
development  costs totaled $8.0 million.  Cash provided from stock plans totaled
$1.5 million during the current  three-month period ended December 26, 1998. The
effect of foreign currency exchange rate fluctuations on cash and temporary cash
investments was a decrease of $0.2 million.

     Net receivables as of December 26, 1998 were $308.4 million, an increase of
$1.0 million from $307.4 million as of September 26, 1998. Total  inventories as
of December  26,  1998 were $134.2  million,  a decrease  of $7.5  million  from
September 26, 1998,  primarily as a result of the reduction in inventory  levels
related to improved  supply  management.  Net  property,  plant,  and  equipment
increased $5.2 million from  September 26, 1998 to $185.6 million  primarily due
to the  purchases of equipment  and capital  expenditures  for  developing  both
operating and financial  systems and to support the new product  initiatives  in
the server and storage businesses.  Fixed asset dispositions related to the sale
of  demonstration  equipment  totaled $1.0  million for the current  three-month
period. Management expects that sales of demonstration equipment will continue.

     The increase of $4.4 million in other  assets from  September  26, 1998 was
attributed  mainly to the  capitalization  of software  development costs net of
related amortization.

     The decrease of $34.8 million in accounts  payable from  September 26, 1998
levels was attributed  mainly to the timing of payments  related to purchases of
material and a decrease in the value of unmatured  foreign  exchange  contracts.
Other current and other  liabilities  decreased by  approximately  $10.3 million
from September 26, 1998 to $296.1 million.  The decrease from September 26, 1998
was  primarily  related to funding of the  Company's  domestic  pension plan and
payments  related to the  Company's  restructuring  program.  Long-term  debt of
$212.8 million remained unchanged from September 26, 1998.

<PAGE>

Year 2000 Information and Readiness Disclosure

     The "Year 2000 issue" arises  because many  computer  hardware and software
systems use only two digits to represent  the year.  As a result,  these systems
and programs may not correctly handle dates beyond 1999,  resulting in errors in
information or program or systems failures. Assessments of the potential effects
of the Year 2000 issues vary markedly among  different  companies,  governments,
consultants,  economists,  and  commentators.  It is not possible to  accurately
predict what the actual impact may be. In this context,  the Company  offers the
following  statements  concerning the Year 2000 issues.  All statements made and
referred to here are Year 2000  readiness  disclosures  under the U.S. Year 2000
Information and Readiness Disclosure Act.

1.   Product Readiness and Customer Communications

     The  Company  is  communicating  and  continues  to  communicate  with  its
customers  concerning the Year 2000 issue. In addition,  the Company has created
Data    General   and    CLARiiON    Year   2000    Internet    web   sites   at
http://www.dg.com/year2000 and  http://www.clariion.com/corporat/yr2000readiness
 .html where Year 2000 readiness disclosures  concerning various products and the
Company's  Year 2000 program are made  available  to  customers  and the general
public.

     The  Company  has  established  teams to codify and  confirm  the Year 2000
readiness of Data  General's  AViiON,  CLARiiON,  and 32-bit ECLIPSE MV computer
products,  as well as Data General Pentium  processor-based and later generation
personal computers.  Based on these efforts as of December 26, 1998, and subject
to ongoing  investigation,  the Company has  identified  many products which are
either Year 2000 Ready or may be made so by means of Year 2000 updates which the
Company  intends to make  available.  The Company is making no assurance of Year
2000  readiness for products not so  identified.  As well,  the Company does not
intend to  generally  address the Year 2000  readiness of  third-party  products
(i.e., products not marketed under the Data General or CLARiiON brand name).

2.   Data General's Internal Systems, Manufacturing Processes, and Facilities

     With regard to the  Company's own business  systems,  Data General has been
preparing for Year 2000 since mid-1996,  and has established teams to coordinate
solutions  to the Year 2000 issue for its own internal  information  systems and
applications across the Company's operations worldwide. As of December 26, 1998,
the  Company's  assessment  was that a  significant  proportion of the Company's
information system and applications have been rendered Year 2000 Ready through a
combination  of  re-engineering,  software  updates,  or  replacement  with  new
technologies.  The Company is continuing its assessment and  remediation of Year
2000 issues. Based on existing plans and schedules,  and subject in any event to
the possibilities of delays, the Company plans to complete the process of making
all its significant internal information systems Year 2000 Ready in time to meet
the Company's specific business requirements. Although Data General's evaluation
of its information  management systems is still in process, the Company believes
that the impact of the Year 2000 issues on its business systems and applications
should not have a material adverse impact on future results.

     The Company has also  undertaken  an  assessment  of the Year 2000 issue as
related to its manufacturing facilities and processes.  Although work remains to
be done, a significant  portion of this  evaluation  has been  completed and the
Company is not aware at December 26, 1998,  of any material  Year 2000  concerns
with respect to its manufacturing  facilities and processes. The Company is also
continuing  its  assessment  of the  possible  impact of Year 2000 issues on the
operations  of its  facilities  (including  such  matters as  security  systems,
building equipment,  and potential interruptions to utilities).  This evaluation
is ongoing at this time.  It is the Company's  intention  that all material Year
2000  issues  regarding  the  operation  of the  Company's  facilities  will  be
addressed as the requisite information is received by the Company.

<PAGE>

3.   Data General's Suppliers

     The  Company's  procurement  organizations  are seeking to monitor the Year
2000  readiness of the Company's key suppliers.  In 1997, the Company  contacted
over 200 of its significant suppliers to determine their Year 2000 readiness. In
December,  1998, the Company sent Year 2000 readiness  questionnaires  to a more
extensive  list of  suppliers,  and will be assessing the  responses.  Since the
Company's  suppliers' Year 2000  preparations and assessments are ongoing,  Data
General's  efforts to monitor the Year 2000  readiness of key suppliers  will be
continuing.  If Year 2000 readiness  issues are  identified  concerning the Year
2000 readiness of suppliers,  the Company intends to evaluate  contingency plans
as needed to address the Company's business requirements.

     Since  determining the Year 2000 readiness of suppliers  depends upon their
cooperation   and  upon  their   disclosure  of  often  imprecise  or  estimated
information,  it is likely  that the  Company's  inquiries  will not be entirely
successful,  and it remains  possible  that  actual  results  may  deviate  from
assurances which were given to the Company. It is possible that  notwithstanding
the Company's efforts, interruptions of key components or services could have an
adverse impact on the Company's  operations and future  results.  If significant
exposures are identified, the Company expects during 1999 to assess the efficacy
and   reasonability  of  contingency   plans  to  mitigate  or  avoid  potential
interruptions to delivery of critical supplies or services,  but  alternatives--
particularly  for  single-sourced  components  or  suppliers--may  not always be
readily  available  or  economically  reasonable.  It is  likely  that not every
potential Year 2000 exposure will be protected by a contingency  plan; a measure
of  reasonable  business  risk  will be  undertaken  relative  to the Year  2000
problem, both by Data General and by other companies.

4.   Risks of Claims

     There may be a  potential  for claims  against  the  Company  arising  from
products and services  that were not Year 2000 Ready.  Because the Company is in
the business of selling  computer system  products,  the Company's risk of being
subjected  to lawsuits  relating to Year 2000 issues with its products is likely
to be greater than that of companies  in other  industries.  The outcomes of any
Year  2000  claims  and the  impact  of such  claims  on the  Company  cannot be
determined   at  this  time;   such  outcomes  will  depend  on  the  facts  and
circumstances  of each  situation and an evolving state of law as these types of
claims are addressed by legal systems worldwide.

5.   Accounting Treatment of Year 2000 Expenses

     The cost of addressing  Year 2000 issues is presently  being funded through
operating  cash  flows.   The  Company  is  expensing   costs   associated  with
identification  and  resulting  changes to its systems,  but does not expect the
amounts  to have a  material  effect on its  financial  position  or  results of
operations.  During the fiscal year ended  September  26, 1998,  the Company had
expensed  approximately  $840,000  in Year  2000  costs for  internal  labor and
outside   consultants  in  connection  with  internal  projects  supporting  the
Company's critical systems and has expensed an additional $322,000 for the three
months ended  December 26, 1998. As of December 26, 1998,  the Company  believes
the  cost of  administering  its Year  2000  readiness  program  will not have a
material adverse impact on future earnings.

<PAGE>

6.   Certain Additional Risk Factors

     It is unknown how the Company's  sales may be impacted by Year 2000 issues.
As the Company's  customers focus on preparing  their  businesses for Year 2000,
capital budgets in the near term may be redirected toward  remediation  efforts,
potentially  delaying the purchase and  implementation  of new systems,  thereby
creating  less demand for the Company's  products and  services.  Alternatively,
sales of Year 2000 Ready Data General  products  could be increased,  to replace
older  products.  Service  revenues  could be reduced if  customers  discontinue
support of  products  which are not Year 2000  Ready,  or perhaps  increased  as
customers  purchase new, Year 2000 Ready systems.  As well, the Company's  sales
during 1999 could be affected by the  customers'  perceptions  of Data General's
own state of Year 2000  readiness.  All these factors could affect the Company's
future revenues.

     Overriding  any  preparations  taken by the  Company,  the Year 2000  issue
presents risks and  uncertainties  that could affect the Company;  these include
unexpected  Year  2000  issues,  or  unexpected   problems  arising  from  plans
implemented to anticipate Year 2000 problems;  extended  interruptions to power,
water  or  telecommunications  utility  services;  potential  unavailability  of
skilled  or  critical   personnel;   delays  or  interruptions  in  national  or
international  transportation  systems; and potential  governments' responses to
Year 2000  emergencies,  among others.  Further,  there can be no assurance that
there will not be delays in, or increased costs  associated  with, the Company's
Year 2000 readiness efforts,  or that the Company's  suppliers and other parties
will adequately prepare for the Year 2000. The nature of these  uncertainties is
such that it  remains  possible  that Year 2000  issues  could  have a  material
adverse  impact on the Company's  operations  and financial  results.  While the
Company does not currently  expect that this will be the case,  and continues to
aggressively pursue its preparations for the Year 2000, the Company can offer no
express  assurance  whether or to what  extent the  Company  may be  affected by
matters  which it has not  anticipated  or by matters  outside of the  Company's
control.  The Company recognizes the need to continue its analysis,  assessment,
monitoring, and planning for the various Year 2000 issues, across its businesses
worldwide,  and to address Year 2000 issues as they are identified.  Within that
uncertain context,  however, and subject to the various factors discussed above,
the Company  believes that the impact of Year 2000 issues on its business should
not have a  material  adverse  effect on the  Company's  financial  position  or
results of operations.


Market Risk

     The  Company is exposed to market  risk  primarily  in its cash and foreign
currency transactions. Because a substantial portion of the Company's operations
and  revenue  occur  outside the United  States,  the  Company's  results can be
significantly  impacted  by changes  in foreign  currency  exchange  rates.  The
Company  manages its foreign  currency  risk through the use of forward  foreign
currency contracts. The Company does not hold or enter into derivative financial
instruments for trading  purposes.  At inception,  the forward foreign  currency
contracts  are  designated as hedges of  intercompany  accounts  receivable  and
foreign  sales  which  are  firmly  committed  or  forecasted.  These  contracts
generally  mature  within three  months.  Market value gains and losses on these
contracts  are  included in the cost of product  revenues and  generally  offset
exchange gains or losses on the related transactions.

     As of December  26,  1998,  the Company had entered  into  forward  foreign
currency  contracts to purchase $40.9 million and sell $125.4 million in various
foreign  currencies  with maturity dates between January 25, and March 30, 1999.
The potential gain or loss for a  hypothetical  10% beneficial or adverse change
in foreign  currency  exchange rates on the forward foreign  currency  contracts
maturing after December 26, 1998 would result in a gain or loss of approximately
$8.4  million.  The  Company  expects  that this gain or loss would be offset by
exchange gains or losses on the related hedged transactions.

<PAGE>

Euro Conversion

     On January 1, 1999, 11 of the 15 members of the European Union  established
fixed  conversion  rates between their existing  currencies and the "euro".  The
euro will trade on  currency  exchanges  and the legacy  currencies  will remain
legal  tender for a  transition  period  between  January 1, 1999 and January 1,
2002.  During the transition  period,  public and private  companies may pay for
goods  and  services  using  the  euro  or the  participating  country's  legacy
currency.  The participating  countries will issue sovereign debt exclusively in
euros, and will redenominate outstanding sovereign debt. Participating countries
no longer control their own monetary policies by directing  independent interest
rates for their legacy  currencies.  Instead,  the authority to direct  monetary
policy,  including money supply and official interest rates will be exercised by
the new European Central Bank.

     The Company has  established  plans and has begun  developing the necessary
modifications  for  the  technical   adaptation  of  its  internal   information
technology and other systems to accommodate euro-denominated  transactions.  The
Company is also  assessing the business  implications  of the  conversion to the
euro, including long-term competitive implications and the effect of market risk
with  respect to  financial  instruments.  The  Company is  currently  unable to
determine the ultimate financial impact of these matters, if any, on its results
of  operations,  financial  condition or cash flows.  However,  the Company will
continue  to assess  the  impact  of euro  conversion  issues as the  applicable
accounting, tax, legal, and regulatory guidance evolves.

     Statements  concerning the Company's  business  outlook or future  economic
performance;  Year 2000 readiness; currency market risk; Euro conversion issues;
anticipated profitability,  revenues, expenses or other financial items; product
or  service  line  growth,  plans  or  objectives;   and  statements  concerning
assumptions   made  or  expectations  as  to  any  future  events,   conditions,
performance or other matters, are "forward-looking  statements", as that term is
defined  under the  Federal  Securities  Laws.  Forward-looking  statements  are
subject to risks,  uncertainties  and other  factors  which could  cause  actual
results to differ  materially from those stated in such statements.  Such risks,
uncertainties  and factors  include,  but are not limited  to,  fluctuations  in
customer  demand,  order  patterns and inventory  levels,  changes and delays in
product  development plans and schedules,  customer  acceptance of new products,
changes in pricing or other actions by competitors, general economic conditions,
as well as other risks detailed in the Company's filings with the Securities and
Exchange  Commission,  including Data General's Report on Form 10-K for the 1998
fiscal year ended September 26, 1998 and this Quarterly  Report on Form 10-Q for
the first fiscal quarter of 1999, which ended December 26, 1998.

<PAGE>


PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

     The Company has been engaged in patent infringement  litigation against IBM
Corporation since November 1994. Two lawsuits, both in the discovery stages, are
pending in the United States District Court for the District of Massachusetts in
Worcester.  The Company  alleges that several IBM products  including the AS/400
midrange  systems  and the AS/400  RISC-based  computer  product  line  infringe
various  Company  patents.  Both  suits seek  compensatory  damages  and,  where
appropriate, injunctive relief. IBM has answered both complaints, has denied the
Company's infringement claims and has interposed counterclaims alleging that the
Company's AViiON and CLARiiON computer systems infringe IBM patents.

     Although the Company  believes its claims are valid,  it cannot predict the
outcome of the  litigation.  In the opinion of management,  based on preliminary
evaluation of the IBM patents  covered in the  counterclaims  and subject to the
risks of  litigation,  the  counterclaims  are without  merit,  the Company will
prevail thereon and the counterclaims will not have a material adverse impact on
the results of operations or the financial position of the Company.

     The Company and certain of its  subsidiaries  are involved in various other
patent infringement,  contractual,  and proprietary rights suits. In the opinion
of management,  the  conclusion of these suits will not have a material  adverse
effect on the financial  position or results of operations and cash flows of the
Company and its subsidiaries.

<PAGE>

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

(a)      Exhibits:

     3.  (c)      By-Laws of the Company, as amended through November 4, 1998.

     3.  (e)      Amendment to Certificate of Incorporation of the Company, 
                  filed January 28, 1999.

     10. (jj)     1998 Employee Stock Option Plan, previously filed as Exhibit 
                  4.1 to the Company's Registration Statement on Form S-8, 
                  Registration Number 333-69559, which is incorporated herein by
                  reference.

     10. (kk)     Form of (Key Executive) 1998 Employee Stock Option Agreement.

     10. (ll)     Form of Amendment to Employment Agreements between the Company
                  and its key executives.

     10. (mm)     1998 Non-Employee Director Stock Option Plan, previously filed
                  as Exhibit 4.2 to the Company's Registration Statement on Form
                  S-8, Registration Number 333-69559, which is incorporated 
                  herein by reference.

     10. (nn)     Form of 1998 Non-Employee Director Stock Option Agreement.

     10. (oo)     Summary of 1999 Fiscal Year Bonus Opportunity for Chief 
                  Executive Officer.

     10. (pp)     Amendment to Supplemental Pension and Retiree Medical 
                  Agreement dated December 2, 1998, between the Company and its
                  President and Chief Executive Officer.

     11.          Computation of basic and diluted earnings per share.


(b)      No reports on Form 8-K were filed during the current quarter ended 
         December 26, 1998.

<PAGE>

                                    SIGNATURE



     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.



                                               DATA GENERAL CORPORATION
                                                      (Registrant)

                                                  /s/ John J Gavin Jr.
                                         ------------------------------------
                                                   John J. Gavin Jr.
                                             Vice President; Controller; and
                                              Acting Chief Financial Officer




                                                 /s/ Robert C. McBride
                                         ------------------------------------
                                                    Robert C. McBride
                                             Vice President; Treasurer; and
                                             Acting Chief Accounting Officer


 Dated:  February 4, 1999

<PAGE>

                                    EXHIBITS


Index to Exhibits.

     3.  (c)      By-Laws of the Company, as amended through November 4, 1998.

     3.  (e)      Amendment to Certificate of Incorporation of the Company,
                  filed January 28, 1999.

     10. (jj)     1998 Employee Stock Option Plan, previously filed as Exhibit
                  4.1 to the Company's Registration Statement on Form S-8, 
                  Registration Number 333-69559, which is incorporated herein 
                  by reference.

     10. (kk)     Form of (Key Executive) 1998 Employee Stock Option Agreement.

     10. (ll)     Form of Amendment to Employment Agreements between the Company
                  and its key executives.

     10. (mm)     1998 Non-Employee Director Stock Option Plan, previously filed
                  as Exhibit 4.2 to the Company's Registration Statement on 
                  Form S-8, Registration Number 333-69559, which is incorporated
                  herein by reference.

     10. (nn)     Form of 1998 Non-Employee Director Stock Option Agreement.

     10. (oo)     Summary of 1999 Fiscal Year Bonus Opportunity for Chief
                  Executive Officer.

     10. (pp)     Amendment to Supplemental Pension and Retiree Medical
                  Agreement dated December 2, 1998, between the Company and its 
                  current President and Chief Executive Officer.

     11.          Computation of basic and diluted earnings per share.