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 July 4, 1998

    / /    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934
              For the Transition period from       to
                                             -----    -----

                     Commission File Number 0-24918
                                            -------

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

           Massachusetts                         04-2889151
   --------------------------------   ---------------------------------
   (State or other jurisdiction       (IRS Employer Identification No.)
   of incorporation or organization)

                  28 Crosby Drive, Bedford, MA 01730
     (Address of principal executive offices, including Zip Code)

                            (781) 687-1000
         (Registrant's telephone number, including area code)


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


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.  YES /x/ NO
           ---    ---

The number of shares outstanding of the registrant's Common Stock as
of July 4, 1998 was 30,330,020.

<PAGE>

                           SHIVA CORPORATION

                                 INDEX
                                 -----

Part I        Financial Information

      Item 1  Consolidated Financial Statements

              Consolidated Balance Sheet
              July 4, 1998 and January 3, 1998

              Consolidated Statement of Operations
              Three and six months ended July 4, 1998
              and June 28, 1997

              Consolidated Statement of Cash Flows
              Six months ended July 4, 1998 and June 28, 1997

              Notes to Consolidated Financial Statements

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

Part II       Other Information

      Item 1  Legal Proceedings

      Item 4  Submission of Matters to a Vote of Security Holders

      Item 5  Stockholder Proposals for 1999 Annual Meeting

      Item 6  Exhibits and Reports on Form 8-K

Signature

<PAGE>

<TABLE>
                           SHIVA CORPORATION
                       Consolidated Balance Sheet
               (in thousands, except share related data)
<CAPTION>
                                          July 4,     January 3,
                                           1998          1998
                                        -----------   ----------
                                        (unaudited)
<S>                                     <C>           <C>
Assets
Current assets:
  Cash and cash equivalents              $ 21,113       $ 58,915
  Short-term investments                   45,914         36,868
  Accounts receivable, net of
   allowances of $8,148 at July 4,
   1998 and $8,037 at January 3, 1998      19,493         23,169
  Inventories                              10,939         14,058
  Deferred income taxes                     8,683          8,683
  Prepaid expenses and other current
   assets                                   2,102          2,369
                                         --------       --------
     Total current assets                 108,244        144,062

Property, plant and equipment, net         20,185         26,093
Deferred income taxes                      22,815          8,840
Other assets                                7,172          3,251
                                         --------       --------
     Total assets                        $158,416       $182,246
                                         ========       ========
Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                       $  6,542       $  9,376
  Accrued expenses                         28,692         22,304
  Deferred revenue                          5,002          4,068
                                         --------       --------
     Total current liabilities             40,236         35,748

Deferred income taxes                         561            554
                                         --------       --------
     Total liabilities                     40,797         36,302
                                         --------       --------
Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.01 par value;
   1,000,000 shares authorized none
   issued                                       -              -
  Common stock. $.01 par value;
   100,000,000 shares authorized,
   30,436,135 and 29,605,848 shares
   issued and outstanding at July 4,
   1998 and January 3, 1998, respectively     304            296
  Additional paid-in capital              154,688        153,036
  Treasury stock at cost, 106,115
   shares at July 4, 1998                  (1,307)           -
  Unrealized gain on investments               32            110
  Cumulative translation adjustment          (244)          (308)
  Accumulated deficit                     (35,854)        (7,190)
                                         --------       --------
     Total stockholders' equity           117,619        145,944
                                         --------       --------
     Total liabilities and stockholders'
      equity                             $158,416       $182,246
                                         ========       ========
<FN>
             The accompanying notes are an integral part
              of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
                           SHIVA CORPORATION
                  Consolidated Statement of Operations
                  (in thousands, except per share data)
                               (unaudited)
<CAPTION>
                            Three months ended    Six months ended
                           -------------------   ------------------
                            July 4,   June 28,   July 4,   June 28,
                             1998       1997       1998       1997
                           --------   --------   -------   --------
<S>                        <C>       <C>        <C>       <C>
Revenues:                  
   Product                  $27,678   $33,598    $57,494   $58,966
   Service                    8,460     1,628     16,634     3,169
   Licenses and Royalties     2,156     4,512      2,197     8,762
                            -------   -------    -------   -------
    Total revenues           38,294    39,738     76,325    70,897
                            -------   -------    -------   -------
Cost of revenues:
   Product                   12,524    14,256     25,879    34,343
   Service                    5,038     1,693     10,232     3,245
                            -------   -------    -------   -------
    Total cost of revenues   17,562    15,949     36,111    37,588
                            -------   -------    -------   -------
Gross profit                 20,732    23,789     40,214    33,309
                            -------   -------    -------   -------
Operating expenses:
   Research and development   4,640     5,778      9,221    11,739
   Selling, general and
    administrative           15,202    20,409     30,010    38,307
   In-process research and
    development                   -         -     34,500         -
   Restructuring expenses     9,435         -     11,065         -
                            -------   -------    -------   -------
   Total operating expenses  29,277    26,187     84,796    50,046
                            -------   -------    -------   -------
Loss from operations         (8,545)   (2,398)   (44,582)  (16,737)

Interest income                 891       938      2,014     1,900
Interest and other income
  (expense), net                614      (146)       415      (268)
                            --------   -------   --------  --------
Loss before income taxes     (7,040)   (1,606)   (42,153)  (15,105)
Income tax benefit           (2,253)     (610)   (13,489)   (5,739)
                            --------   -------  ---------  --------
Net loss                    $(4,787)  $  (996)  $(28,664)  $(9,366)
                            ========  ========  =========  ========
Net loss per share -
  basic and diluted         $ (0.16)  $ (0.03)  $  (0.95)  $ (0.32)
                            ========  ========  =========  ========
Shares used in computing
  net loss per share -
  basic and diluted          30,277    29,128     30,065    29,050
                            ========  ========  =========  ========
<FN>
             The accompanying notes are an integral part
              of the consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
                           SHIVA CORPORATION
                  Consolidated Statement of Cash Flows
            Increase (Decrease) in Cash and Cash Equivalents
                             (in thousands)
                              (unaudited)
<CAPTION>
                                           Six Months Ended
                                        -----------------------
                                        July 4,        June 28,
                                         1998            1997
                                        -------        --------
<S>                                    <C>            <C>
Cash flows from operating activities
  Net loss                              $(28,664)      $ (9,366)
  Adjustments to reconcile net loss
   to net cash provided by
   operating activities:
  In-process research and development     34,500              -
  Depreciation and amortization            6,305          4,631
  Non-cash restructuring charge            3,570              -
  Deferred income taxes                  (13,527)        (6,443)
  Changes in assets and liabilities,
   net of effects of acquisition:
    Accounts receivable                    4,531         13,640
    Inventories                            3,221          2,162
    Prepaid expenses and other
     current assets                          310             19
    Accounts payable                      (3,353)        (4,239)
    Accrued expenses                       6,341           (420)
    Deferred revenue                         929            571
    Other long term liabilities                -            (17)
                                         --------       --------
  Net cash provided by operating
   activities                             14,163            538
                                         --------       --------
Cash flows from investing activities
  Purchases of property, plant and
   equipment                              (2,257)        (5,910)
  Payments for acquisition               (39,912)             -
  Capitalized software development
   costs                                     (88)          (399)
  Purchases of short-term investments    (27,119)       (10,686)
  Proceeds from maturity and sales of
   short-term investments                 17,995         16,109
  Change in other assets                    (330)          (824)
                                         --------       --------
   Net cash used by investing
    activities                           (51,711)        (1,710)
                                        ---------      ---------
Cash flows from financing activities
  Principal payments on long-term
   debt and capital lease obligations       (117)          (229)
  Purchases of treasury stock             (1,307)             -
  Proceeds from exercise of stock
   options and warrants                    1,212            671
                                        ---------      ---------
    Net cash provided (used) by
     financing activities                   (212)           442
                                        ---------      ---------
Effects of exchange rate changes on
 cash and cash equivalents                   (42)           583
                                        ---------      ---------
Net decrease in cash and cash
 equivalents                             (37,802)          (147)
Cash and cash equivalents, beginning
 of period                                58,915         72,067
                                        ---------      ---------
Cash and cash equivalents, end of
 period                                 $ 21,113       $ 71,920
                                        =========      =========
<FN>
              The accompanying notes are an integral part
               of the consolidated financial statements.
</TABLE>

<PAGE>
                           SHIVA CORPORATION
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              (unaudited)

1.   BASIS OF PRESENTATION:

    The accompanying unaudited consolidated financial statements
    include the accounts of the Company and its wholly-owned
    subsidiaries, and have been prepared by the Company in accordance
    with generally accepted accounting principles.  In the opinion of
    management, these unaudited consolidated financial statements
    contain all adjustments necessary for a fair presentation of the
    Company's financial position, results of operations and cash flows
    at the dates and for the periods indicated.  Such adjustments are
    of a normal recurring nature, except for the restructuring charges
    incurred during the three-month and six-month periods ended July
    4, 1998 and the in-process research and development charges
    incurred during the six-month period ended July 4, 1998.  While
    the Company believes that the disclosures presented are adequate
    to make the information not misleading, these consolidated
    financial statements should be read in conjunction with the
    consolidated financial statements and related notes included in
    the Company's Annual Report on Form 10-K for the fiscal year ended
    January 3, 1998.

    The results of operations for the three-month and six-month
    periods ended July 4, 1998 are not necessarily indicative of the
    results expected for the full fiscal year.


2.  EARNINGS PER SHARE:

The Company has adopted Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings per Share," and has restated earnings per
share amounts for all periods presented herein.

<TABLE>
<CAPTION>
                                      Three months    Three months
                                      ended July 4,   ended June 28,
                                         1998             1997
                                      -------------   --------------
<S>                                   <C>             <C>
Net loss                              ($4,787,000)       ($996,000)
                                      ============    =============
Weighted average shares outstanding    30,276,645       29,128,123
Common-equivalent share outstanding             -                -
                                      -----------     -------------
 Weighted average and common
  equivalent shares outstanding        30,276,645       29,128,123
                                      -----------     -------------
Basic and diluted net loss per share       ($0.16)          ($0.03)
                                      ============    =============

                                       Six months       Six months
                                      ended July 4,   ended June 28,
                                         1998             1997
                                      -------------   --------------
Net loss                             ($28,664,000)      ($9,366,000)
                                     =============    ==============
Weighted average shares outstanding    30,065,206        29,049,872
Common-equivalent share outstanding             -                 -
                                      -----------     -------------
 Weighted average and common
  equivalent shares outstanding        30,065,206        29,049,872
                                      -----------     -------------
Basic and diluted net loss per share       ($0.95)          ($0.32)
                                      ============    =============
</TABLE>

<PAGE>

3.  CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS:

    At July 4, 1998, the Company had cash and cash equivalents of
    $21,113,000 and $45,914,000 of short-term investments, including
    an unrealized gain of $32,000 recorded as a separate component of
    stockholders' equity.  The Company's short-term investments at
    July 4, 1998, classified as available-for-sale, consist of
    municipal securities, corporate debt securities, certificates of
    deposit, and U.S. Treasury securities, with various maturity dates
    through June 2000.

<PAGE>

4.  INVENTORIES:

<TABLE>
<CAPTION>

    Inventories consist of the following:

                                     July 4,     January 3,
    (in thousands)                    1998          1998
                                     -------     ----------
    <S>                              <C>          <C>
    Raw materials                    $ 5,150      $ 7,199
    Work-in-process                      126           57
    Finished goods                     5,663        6,802
                                     -------      --------
                                     $10,939      $14,058
                                     =======      ========
</TABLE>


5.  COMPREHENSIVE INCOME:

    In June 1997, the Financial Accounting Standards Board issued
    Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
    "Reporting Comprehensive Income."  The Company adopted SFAS 130 on
    January 4, 1998, which establishes standards for reporting
    comprehensive income and its components in the consolidated
    financial statements.  Comprehensive loss for the three-month and
    six-month periods ended July 4, 1998 was $4,897,000 and
    $28,673,000, respectively, and includes the after-tax effect of
    foreign currency translation adjustments and unrealized holding
    losses arising during the period.


6.  ACQUISITION:

    On March 26, 1998, the Company acquired Isolation Systems,
    Limited, a leading developer of virtual private networking ("VPN")
    hardware and software solutions based in Toronto, Ontario in
    exchange for cash paid by the Company from its existing cash and
    short-term investment balances.  The acquisition was accounted for
    as a purchase.  Accordingly, the purchase price of approximately
    $39,912,000 was allocated to the underlying assets and liabilities
    based on their respective fair values at the date of closing.  The
    fair value of the net assets acquired was $617,000, and
    $34,500,000 of the purchase price was allocated to in-process
    research and development. The amount allocated to in-process
    research and development was determined through established
    valuation techniques in the high-technology communications
    industry and were expensed upon acquisition, as it was determined
    that technological feasibility had not been established and no
    alternative uses existed.  The excess of the purchase price over
    the net assets acquired, excluding the in-process research and
    development charge recorded in the first quarter of 1998, will be
    amortized on a straight-line basis over three years.  This excess
    approximated $4,795,000, and consisted of developed technology of
    $2,000,000, an assembled workforce of $300,000 and $2,495,000 in
    other intangible assets.   Pursuant to an indemnification
    agreement, upon the occurrence of certain events, the Company may
    also pay an amount not to exceed $6,500,000, which would be
    recorded as additional goodwill and amortized over the remaining
    useful life of the asset.

    The following summary, prepared on an unaudited pro forma basis,
    combines the results of operations as if Isolation Systems,
    Limited had been acquired as of December 29, 1996; however the
    one-time charge of $34,500,000 as a result of the purchase price
    allocated to in-process research and development has been excluded
    due to its non-recurring nature.  The pro forma results have been
    adjusted in each of the periods presented below to reflect the
    loss of interest income as a result of the cash used in the
    acquisition as well as the amortization of goodwill resulting from
    the transaction.

<PAGE>

<TABLE>
<CAPTION>
                                       Three months ended
                                 -----------------------------
    (in thousands)                July 4, 1998   June 28, 1997
                                  ------------   -------------
    <S>                           <C>             <C>
    Total revenues                $ 38,294        $ 39,890
    Operating loss                  (8,545)         (3,018)
    Net loss                        (4,787)         (1,864)
                                    =======         =======
    Net loss per share - basic 
     and diluted                  $ ( 0.16)       $ ( 0.06)
                                    =======         =======

                                        Six months ended
                                  ----------------------------
    (in thousands)                July 4, 1998   June 28, 1997
                                  ------------   -------------
    Total revenues                $ 77,583        $ 71,276
    Operating loss                 (10,101)        (18,241)
    Net loss                        (5,701)        (11,241)
                                    =======        ========
    Net loss per share - basic 
     and diluted                  $ ( 0.19)       $ ( 0.39)
                                    =======         =======
</TABLE>

    The unaudited pro forma results are not necessarily indicative of
    what actually would have occurred if the acquisition had been in
    effect for the entire periods presented.  In addition, they are
    not intended to be a projection of future results and do not
    reflect any synergies that might be achieved from combined
    operations.

7.  RESTRUCTURING EXPENSES

    In the three-month period ended July 4, 1998, the Company approved
    and implemented a restructuring program to align its financial
    model with its strategic focus on providing remote access solutions
    for business.  The plan included a reduction of the Company's
    worldwide workforce by approximately 130 employees, most of which
    were based in Europe and the remainder in the United States.  A
    majority of these employees indentified were terminated on July 13,
    1998 and the remaining terminations are expected to be substantially
    complete by the end of fiscal 1998.  The Company recorded restructur-
    ing expenses of $9,435,000 in the three-month period ended July 4,
    1998, which included $4,585,000 for severance, benefits and other
    personnel-related expenses, $3,570,000 in non-cash expenses for
    fixed asset write-downs, and $1,280,000 in professional fees,
    facilities and other costs.  As of July 4, 1998, $1,159,000 of
    severance, benefits and other personnel-related costs and $340,000
    of professional fees, facilties and other costs had been paid.

    In addition, the Company recorded $1,630,000 of restructuring
    expenses during the first quarter of fiscal 1998.  These expenses,
    comprised primarily of severance-related costs, were the result of
    the restructuring of the Company's sales and marketing operations.
    Substantially all of these costs have been paid.

8.  RECENTLY ENACTED ACCOUNTING PRONOUNCEMENTS:

    In June 1998, the Financial Accounting Standards Board (FASB)
    issued Statement of Financial Accounting Standards No. 133,
    Accounting for Derivative Instruments and Hedging Activities
    (FAS 133).  FAS 133 is effective for all fiscal quarters of all
    fiscal years beginning after June 15, 1999.  FAS 133 requires
    that all derivative instruments be recorded on the balance sheet
    at their fair value.  Changes in the fair value of derivatives
    are recorded each period in current earnings or other comprehensive
    income, depending on whether a derivative is designated as part of
    a hedge transaction and, if it is, the type of hedge transaction.
    For fair-value hedge transactions in which the Company is hedging
    changes in an asset's, liability's, or firm commitment's fair
    value, changes in the fair value of the derivative instrument will
    generally be offset in the income statement by changes in the
    hedged item's fair value.  For cash-flow hedge transactions, in
    which the Company is hedging the variability of cash flows related
    to a variable-rate asset, liability, or a forecasted transaction,
    changes in the fair value of the derivative instrument will be
    reported in other comprehensive income.  The gains and losses on
    the derivative instrument that are reported in other comprehensive
    income will be reclassified as earnings in the periods in which
    earnings are impacted by the variability of the cash flows of the
    hedged item.  The ineffective portion of all hedges will be
    recognized in current-period earnings.

    The Company has not yet determined the impact that the adoption of
    FAS 133 will have on its earnings or statement of financial
    position.

<PAGE>
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Nortel Agreement.  On February 27, 1998, the Company signed a new
multi-year agreement (the "1998 Agreement") with Northern Telecom Inc.
("Nortel").  The Company and Nortel have been working together to
provide remote access equipment to service providers since 1995. Under
the new agreement, Nortel issues purchase orders for a minimum of
$5,000,000 per quarter to purchase the Company's products with a
minimum aggregate amount of $40,000,000 over the term of the contract,
which began in the three-month period ended April 4, 1998.  The
Company's ability to recognize revenue related to these purchase
orders, however, may be impacted by several factors including, but
not limited to, the timing of the orders placed, the ability of the
Company to ship products in a timely fashion and product availability.
These OEM purchases from Nortel replace the minimum royalty
arrangement with the Company that was in effect during fiscal 1997.
In addition, the Company received total professional services revenue
of $12,000,000 during the first two quarters of fiscal 1998 from
Nortel related to the development of carrier class remote access
technology. The OEM purchases and professional services are expected
to result in higher revenues from Nortel in fiscal 1998 which will
carry lower gross margins than achieved in 1997.  Gross margins on
sales to Nortel are expected to decline in fiscal 1998 from levels in
fiscal 1997 primarily due to the fact that a significant portion of
the revenues from Nortel in fiscal 1997 consisted of royalty revenues,
with little or no direct cost, related to the Rapport 112, an OEM
version of the LanRover Access Switch.

On April 23, 1998, Nortel exercised its option under the 1998
Agreement to license certain Shiva technology. Pursuant to the terms
of the agreement, Shiva will record a total of $26,000,000 ratably
over ten quarters, or $2,600,000 per quarter, which began in the
second quarter of fiscal 1998, for the license and other items related
to intellectual property. Proceeds from this license agreement will be
accounted for as $2,000,000 in LanRover Access Switch revenue and
$600,000 in other income per quarter over the license term.

Revenues.  Revenues in the three-month and six-month periods ended
July 4, 1998 were $38,294,000 and  $76,325,000, respectively, compared
to $39,738,000 and $70,897,000 in the comparable periods in fiscal
1997, respectively.  The 4% decrease in revenues in the three-month
period ended July 4, 1998 was primarily due to lower volume shipments
of the Company's LanRover and LanRover Access Switch products.
Revenues increased 8% in the six-month period ended July 4, 1998
compared to the corresponding period in fiscal 1997 principally due to
higher service revenues, which increased to $16,634,000 in the six-
month period ended July 4, 1998 from $3,169,000 during the comparable
period in fiscal 1997.  This increase was primarily due to $12,000,000
in professional services revenue from Nortel related to the
development of carrier class remote access technology pursuant to the
1998 Agreement. This increase in service revenues is partially offset
by lower product and license and royalty revenues.  Revenues in the
six-month period ended June 28, 1997 were negatively impacted by price
protection provisions of $6,700,000, of which $3,900,000 related to the
LanRover and $2,800,000 related to the LanRover Access Switch due to
increased price competition and price reductions on the V.34 modem card
due to the availability of 56K modem technology in the access concentrator
market.  Price protection rights require the Company to grant retroactive
price adjustments for inventories of the Company's products held by
distribution partners if the Company lowers its prices for such products.

Revenues from the LanRover Access Switch in the three-month and six-
month periods ended July 4, 1998 decreased to $14,978,000 and
$29,517,000, respectively, from $19,882,000 and $31,248,000 in the
comparable periods in fiscal 1997, primarily due to lower volume
shipments.  Revenues from the LanRover Access Switch in fiscal 1997
included minimum royalty revenues from Nortel that were based on sales
of the Nortel Rapport 112, an OEM version of the LanRover Access
Switch. These royalty revenues, which will not recur in fiscal 1998 as
outlined above, were partially offset by price protection provisions
of $2,800,000 recorded in the first quarter of fiscal 1997 as outlined
above.

<PAGE>

Revenues from the LanRover product line in the three-month and six-
month periods ended July 4, 1998 decreased to $8,392,000 and
$18,138,000, respectively, from $13,433,000 and $25,763,000 in the
comparable periods in fiscal 1997, primarily due to lower volume
shipments. LanRover revenues in the six-month period ended June 28,
1997 were negatively impacted by price protection provisions of
$3,900,000 as previously mentioned.

Revenues from the Company's other remote access products increased to
$5,228,000 and $9,179,000, respectively, in the three-month and six-
month periods ended July 4, 1998 from $3,035,000 and $7,032,000 in the
comparable periods in fiscal 1997.  The increase in the three-month
and six-month periods ended July 4, 1998 was primarily related to
sales of the Shiva AccessPort product for the small office and home office
market and the introduction of the LanRover VPN Gateway product as a
result of the acquisition of Isolation Systems, Limited on March 26,
1998, partially offset by decreased revenues from certain other
products.

The Company provides its distributors and resellers with product
return rights for stock balancing and product evaluation.  Revenues
were reduced by provisions for product returns of $1,993,000, or 5% of
gross revenues, and $5,316,000, or 7% of gross revenues, in the three-
month and six-month periods ended July 4, 1998, respectively.
Provisions for product returns in the corresponding periods in fiscal
1997 were $726,000, or 2% of gross revenues, and $11,345,000, or 14%
of gross revenues. The decrease in the provision for product returns
in the six-month period ended July 4, 1998 compared to the same period
in fiscal 1997 was primarily a result of provisions recorded in the
first quarter of fiscal 1997 to account for slow-moving and
discontinued products in the Company's North American distribution
channels.

Revenues from OEM customers represented 35% and 32% of revenues in the
three-month and six-month periods ended July 4, 1998, respectively,
compared to 19% and 25% in the comparable periods in fiscal 1997.
The increase in OEM revenues was primarily due to increased revenues
from Nortel, partially offset by decreased revenues from IBM.

International revenues accounted for 32% and 36% of revenues in the
three-month and six-month periods ended July 4, 1998, respectively,
compared with 45% and 53% in the corresponding periods in fiscal 1997.
International revenues were lower in the three-month and six-month
periods ended July 4, 1998 due to weakness in Europe and the Pacific
Rim. International revenues represented a higher proportion of total
revenues in the six-month period ended June 28, 1997 due to the impact
of the return provisions and price protection provisions that significantly
reduced revenues from the Company's North American distribution channels
in 1997.

Gross Profit.  Gross profit was $20,732,000 and $40,214,000, in the
three-month and six-month periods ended July 4, 1998, respectively,
compared to $23,789,000 and $33,309,000 in the comparable periods in
fiscal 1997.  This represented 54% and 53% of revenues in the three-
month and six-month periods ended July 4, 1998, respectively, compared
to 60% and 47% in the corresponding periods in 1997.  Gross profit in
the six-month period ended June 28, 1997 included the negative impact
of price protection provisions of $6,700,000, as discussed above, and
provisions for slow-moving inventories.  The provisions for slow-
moving inventories increased cost of revenues by $6,463,000, and
related to V.34 modem cards, for which demand had decreased due to the
availability of 56K modem technology, and certain other products.
Excluding the impact of these provisions, gross profit as a percentage
of revenues would have been 60% in the six-month period ended June 28,
1997.  Gross profit as a percentage of revenues was negatively impacted
in the three-month and six-month periods ended July 4, 1998 due to the
professional services revenue and OEM product revenues from Nortel.
Each of these revenue streams from Nortel carried lower gross profit
percentages than the Company's non-Nortel product revenues, and
significantly lower gross profit percentages than the Nortel royalty
revenues recorded in the year earlier periods.  The lower gross profit
percentages on the professional services revenue and the OEM product
revenues from Nortel are partially offset by the 100% gross profit on
the $2,000,000 LanRover Access Switch revenue related to the previously
mentioned license agreement with Nortel.  In the future, the Company's
gross margins may be affected by several factors, including but not limited
to the competitive pricing environment, product mix, the distribution
channels used, changes in component costs and the introduction of new
products.

Research and Development. Research and development expenses during the
six-month period ended July 4, 1998 related to the development of new
and existing remote access products, including products which

<PAGE>

incorporate technology to support virtual private networking.
Research and development expenses decreased to $4,640,000 and
$9,221,000 in the three-month and six-month periods ended July 4, 1998
from $5,778,000 and $11,739,000 during the comparable periods in
fiscal 1997. The decrease in these expenses was primarily due to the
restructuring of the Nortel arrangement in fiscal 1998 under which
Nortel contracted with the Company for the development of carrier
class remote access technology.  Under the terms of the 1998
Agreement, the Company has recognized $6,000,000 in professional
services revenue during each of the first two quarters of fiscal 1998
as work was performed.  Accordingly, expenses related to these
development efforts of $3,711,000 and $7,422,000 in the three-month
and six-month periods ended July 4, 1998, respectively, have been included
in cost of service revenues in the accompanying statement of operations.
Customer funded development fees under cost sharing relationships
(including those with Nortel in fiscal 1997), which are reflected as
an offset to research and development expenses, were $1,818,000 and
$3,454,000 in the three-month and six-month periods ended June 28,
1997.  There were no such fees recorded in the three-month and six-
month periods ended July 4, 1998.  There were no capitalized software
development costs in the three-month period ended July 4, 1998,
compared with $245,000 for the comparable period in fiscal 1997.
Capitalized software development costs were $88,000 for the six-month
period ended July 4, 1998, compared with $400,000 in the comparable
period in fiscal 1997.  Gross research and development expenses
increased to $8,352,000 and $16,731,000, respectively, in the three-
month and six-month periods ended July 4, 1998 from $7,840,000 and
$15,593,000 in the comparable periods in fiscal 1997. The Company
anticipates continued significant investment in research and develop-
ment primarily focused on providing remote access solutions for the
business access market.

Selling, General and Administrative.  Selling, general and
administrative expenses decreased to $15,202,000 and $30,010,000 in
the three-month and six-month periods ended July 4, 1998 from
$20,409,000 and $38,307,000 in the comparable periods in fiscal 1997.
These expenses represented 40% and 39% of revenues in the three-month
and six-month periods ended July 4, 1998, respectively, compared to
51% and 54% in the corresponding periods in 1997. The decrease in
gross expenses was due to several factors, including lower personnel
costs due to the restructuring of the Company's sales and marketing
organization as discussed below, as well as decreased costs incurred
for travel, channel and marketing programs, trade shows, recruiting,
temporary help and various facilities related expenses. These
decreases were partially offset by increased bad debt expense.
Selling, general and administrative expenses in the three-month and
six-month periods ended June 28, 1997 are net of expenses reimbursed
by Nortel of $1,532,000 and $2,208,000, respectively, related to
Shiva's Service Provider Group (SPG), a worldwide business unit
comprised of technical sales and support personnel that had been
dedicated to marketing Nortel's remote access equipment to carriers
and service providers through the first quarter of fiscal 1998.
Expenses reimbursed by Nortel in the first quarter of 1998 were
$1,018,000.  Nortel no longer funds the SPG unit.

Restructuring Expenses.  The Company recorded restructuring expenses
of $9,435,000 and $11,065,000 in the three-month and six-month periods
ended July 4, 1998, respectively.  Restructuring expenses primarily
consisted of $4,585,000 in severance, benefits and other personnel
related expenses, $3,570,000 in non-cash expenses for fixed asset
write-downs and $1,280,000 in professional fees, facilities and other
costs.  These restructuring expenses were primarily a result of a
formal plan announced by the Company on April 15, 1998 to restructure
its worldwide operations and align its financial model with the recently
announced strategic focus on providing remote access solutions for
business. Specifically, Shiva will close operations at the Edinburgh,
Scotland, facility and will relocate certain technical support
staff to the Wokingham, United Kingdom, facility.  The Edinburgh
facility was primarily focused on jointly funded engineering
activities with Nortel.  The Company further expects to take an
additional charge of $1,000,000 to $3,000,000 in the third quarter of
1998 to complete its restructuring effort.  This will bring total
anticipated 1998 restructuring charges to $12,000,000 to $14,000,000,
which includes $1,630,000 of charges related to the restructuring of
the Company's sales and marketing operations, which were recorded in
the first quarter of 1998. As of July 4, 1998 the Company has paid
approximately $3,129,000 of these charges.  The Company anticipates
that substantially all of the remaining cash charges will be paid out
from the Company's cash and short-term investment balances by the end
of fiscal 1998.

Interest Income and Expense.  Interest income decreased during the
three-month period ended July 4, 1998 over the corresponding period in
fiscal 1997 primarily as a result of the cash used in the acquisition
of Isolation Systems, Limited.  Interest income increased during the
six-month period ended July 4, 1998 over the corresponding period in
fiscal 1997 primarily due to the Company's shift from federal tax-

<PAGE>

exempt securities into taxable securities, which resulted in a higher
overall yield on its investments. Interest and other income (expense)
for the three-month period ended July 4, 1998 increased due to the
inclusion of $600,000 of income resulting from the previously mentioned
option exercised by Nortel for certain items related to intellectual
property.

Income Tax Benefit.  The Company's effective tax rate in each of the
three-month and six-month periods ended July 4, 1998 was 32%, down
from 38% in each of the three-month and six-month periods ended June
28, 1997, primarily due to the impact of nondeductible restructuring
charges.

Foreign Currency Fluctuations

Foreign currency fluctuations did not have a significant impact on the
comparison of the results of operations in the three-month and six-
month periods ended July 4, 1998 with those of the comparable periods
in fiscal 1997.  However, the Company's international operations will
continue to be exposed to adverse movements in foreign currency
exchange rates which may have a material adverse impact on the
Company's financial results.  The Company enters into forward exchange
contracts to hedge those currency exposures related to certain assets
and liabilities denominated in non-functional currencies and does not
generally hedge anticipated foreign currency cash flows.

Year 2000

The Company recognizes that it must ensure that its products and
operations will not be adversely impacted by Year 2000 software
failures (the "Year 2000 issue") which can arise in time-sensitive
software applications which utilize a field of two digits to define
the applicable year.  In such applications, a date using "00" as the
year may be recognized as the year 1900 rather than the year 2000.
The Company is in the process of evaluating its products for Year 2000
compliance and is currently aware that the SpiderManager and the Shiva
Access Manager products are not Year 2000 compliant.  The
SpiderManager product will display the year number in the activity log
date field as three digits.  The Company believes that this
characteristic does not have any system operational implications for
the product.  Therefore, the Company does not anticipate having to
undertake additional research and development efforts or incur
additional expenses in this regard.  The Shiva Access Manager NT 1.0
product uses only two digits to store year information.  The system
interprets these two digits as being in the twentieth century before
year 2000, and will interpret the two digits as being in the twenty-
first century after year 2000.  The Company believes that this date
calculation methodology could reactivate previously terminated user
accounts and may produce incorrect log files if both twentieth and
twenty-first century dates are involved.  This issue has been
corrected in Shiva Access Manager NT version 2.0 and greater, and the
company strongly recommends that its customers upgrade to version 2.0
to correct the problem.  The Company does not anticipate having to
undertake additional research and development efforts or incur
additional expenses for this issue.  In addition, the Company recently
discovered that certain versions of its Shiva Access Manager product
may contain an additional Year 2000 issue.  The Company is currently
investigating this issue, and has not yet determined the nature and
extent of this issue.  Therefore, the Company can not currently
determine the extent of any additional research and development
efforts or additional expenses which may be required to remedy this
Year 2000 issue.  In addition, the Company is in the process of
replacing many of its business and operating computer systems with
software which, when upgraded, will be Year 2000 compatible.  The
Company is planning to complete all necessary Year 2000 upgrades of
its major systems in 1998, and is currently identifying and developing
conversion strategies for its remaining systems that may be impacted
by the Year 2000 issue.  While the Company does not believe that the
Year 2000 issue will have a material impact on the Company, there can
be no assurance that unanticipated problems will not arise that will
have a material adverse effect on the Company's business and results
of operations.

<PAGE>

Liquidity and Capital Resources

As of July 4, 1998, the Company had $21,113,000 of cash and cash
equivalents and $45,914,000 of short-term investments.  Working
capital decreased by 37% to $68,008,000 at July 4, 1998 from
$108,314,000 at January 3, 1998.

Net cash provided by operations totaled $14,163,000 for the six-month
period ended July 4, 1998 compared with $538,000 during the comparable
period in fiscal 1997.  Net cash provided by operations in the six-
month period ended July 4, 1998 resulted primarily from the net loss
adjusted for non-cash expenses including in-process research and
development, as well as the decrease in accounts receivable and
inventories and the increase in accrued expenses, partially offset by
a decrease in accounts payable.  The decrease in accounts receivable
is primarily due to increased collection activities, and the decrease
in inventories is due to improved inventory management.  The increase in
accrued expenses is primarily due to accrued severance costs related
to the restructuring of the Company mentioned previously.  Net cash
provided by operations in the six-month period ended June 28, 1997
resulted primarily from the decrease in accounts receivable, partially
offset by the net loss adjusted for non-cash expenses and the increase
in deferred income taxes.  The decrease in accounts receivable was due
to decreased revenue levels and the previously mentioned increase in
product return and price protection provisions, as well as increased
collection activity.

Net cash used by investing activities totaled $51,711,000 for the six-
month period ended July 4, 1998, compared to $1,710,000 during the
comparable period in fiscal 1997.  Investment activity in the six-
month period ended July 4, 1998 consisted primarily of payments
related to the purchase of Isolation Systems, Limited, as well as the
net purchase of short-term investments and fixed assets.  Investment
activity in the six-month period ended June 28, 1997 consisted
primarily of purchases of short-term investments and fixed assets,
partially offset by proceeds from short-term investments upon maturity
or sale.

Net cash used by financing activities totaled $212,000 for the six-
month period ended July 4, 1998, compared to net cash provided of
$442,000 in the comparable period in fiscal 1997.  Net cash used by
financing activities for the six-month period ended July 4, 1998
primarily consisted of the purchase of treasury stock, partially
offset by proceeds from stock option exercises.  Net cash provided by
financing activities in the  six-month period ended June 28, 1997
consisted of proceeds from stock option exercises, partially offset by
principal payments on long-term debt and capital lease obligations.

The Company has a $5,000,000 unsecured revolving credit facility with
a bank which expires in March 1999. The terms of the credit facility
require the Company to comply with certain restrictive financial
covenants.  Borrowings under this facility bear interest at the bank's
prime rate.  At July 4, 1998, available borrowings were reduced by
outstanding letters of credit of $837,000 which expire at various
dates in 1998.  The Company had no borrowings outstanding under this
line at July 4, 1998.  At July 4, 1998, the Company was in violation
of certain covenants of this credit facility which have been waived by
the bank. There can be no assurance that the bank will waive any such
violations in the future, which could require the Company to obtain an
alternative credit facility on terms less favorable than the current
facility.  The Company also has a foreign credit facility of
approximately $2,613,000, all of which was available at July 4, 1998.
Available borrowings under this facility are decreased by guarantees
on certain foreign currency transactions.  The terms of the foreign
credit facility require the Company to comply with certain restrictive
financial covenants.  There were no borrowings outstanding under this
foreign credit facility at July 4, 1998.

The Company enters into forward exchange contracts to hedge against
certain foreign currency transactions for periods consistent with the
terms of the underlying transactions.  The forward exchange contracts
have maturities that do not exceed one year.  At July 4, 1998, the
Company had outstanding forward exchange contracts to purchase
$5,198,000 and to sell $1,379,000 in various currencies which matured
on July 23, 1998.

The Company believes that its existing cash and short-term investment
balances, together with borrowings available under the Company's bank
credit facilities, will be sufficient to meet the Company's cash
requirements for at least the next twelve months.

<PAGE>

Factors That May Affect Future Results

Certain information contained herein, and information provided by the
Company or statements made by its employees may, from time to time,
contain "forward-looking" information which involve risks and
uncertainties.  Any statements contained in the Management's
Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere herein that are not historical facts may be
"forward-looking" statements.  Certain information contained herein
concerning the Company's anticipated plans and strategies for its
business, available cash and cash equivalents and sources of
financing, research and development and other expenditures, effects of
the restructuring actions, ability to achieve Year 2000 compliance,
and effects of the 1998 Agreement with Nortel consists of forward-
looking statements.  Without limiting the foregoing, the words
"believes," "expects," "anticipates," "plans," and similar expressions
are intended to identify forward-looking statements.  The Company's
actual future results may differ significantly from those stated in
any forward-looking statements.  Factors that may cause such
differences include, but are not limited to, the factors discussed
below.

The Company's quarterly operating results may vary significantly from
quarter to quarter depending on factors such as the timing of
significant orders and shipments of its products, changes and delays
in product development, new product introductions by the Company and
its competitors, the mix of distribution channels through which the
Company's products are sold and seasonal customer buying patterns.
There can be no assurance that the Company will be able to achieve
future revenue growth and profitability on a quarterly or annual
basis.  Revenues can be difficult to forecast due to the fact that the
Company's sales cycle varies substantially depending upon market,
distribution mechanism and end-user customer.  The Company's expense
levels are based, in part, on its expectations as to future revenues.
If revenue levels are below expectations, operating results may be
adversely affected.  In addition, the Company's distribution partners
typically stock significant levels of inventory, and the Company's
revenues may fluctuate based on the level of partner inventories in
any particular quarter.

The Company has been party to a strategic relationship with Nortel
since 1995 which has evolved over time. Under the terms of the 1998
Agreement with Nortel signed on February 27, 1998, Nortel will
purchase minimum quarterly amounts of the Company's products within a
minimum aggregate amount of $40,000,000 over the term of the contract,
which began in the three-month period ended April 4, 1998.  There can
be no assurance that Nortel will purchase in excess of the minimum
amount or that the Company will be able to fulfill such orders from
Nortel and thus recognize the revenue associated with such orders, in
a linear fashion over the contract term. Non-linear order patterns
from Nortel could cause material fluctuations in the Company's
quarterly financial results.  In addition, the Company has received
professional services revenue from Nortel, through the second quarter
of fiscal 1998, related to the development of carrier class remote
access technology.  There is no obligation on the part of Nortel to
contract for additional such development services nor does the Company
expect to provide such services beyond the second quarter of fiscal 1998.
Revenues from Nortel have exceeded 10% of total revenues in the six-
month period ended July 4, 1998 and in fiscal 1997 and 1996.

On March 26, 1998, the Company completed its acquisition of Isolation
Systems, Limited , a leading developer of VPN hardware and software
solutions based in Toronto, Ontario. Achieving the anticipated
benefits of  this acquisition or any other acquisitions the Company
may undertake will depend in part upon whether the effective
integration of the acquired companies' research and development
organizations, products and technologies, and sales, marketing and
administrative organizations is accomplished in timely manner.  There
can be can be no assurance that the Company will be successful in
integrating the operations of Isolation Systems, Limited.  Moreover,
the integration process may temporarily divert management attention
from the day-to-day business of the Company.  Failure to successfully
accomplish the integration of Isolation Systems could have a material
adverse effect on the Company's business, financial condition and/or
results of operations.

The Company's LanRover and LanRover Access Switch products are
experiencing increased market competition which has caused the Company
to take pricing actions and may require the Company to take future
pricing actions.  The Company provides most of its distribution
partners with product return rights for stock balancing or product
evaluation and price protection rights.  Stock balancing rights permit

<PAGE>

a return of products to the Company for credit against future product
purchases, within specified limits.  Product evaluation rights permit
end-users to return products to the Company through the distribution
partner from whom such products were purchased, within 30 days of
purchase if such end-user is not fully satisfied.  Price protection
rights require the Company to grant retroactive price adjustments for
inventories of the Company's products held by distribution partners if
the Company lowers its prices for such products.  These price
protection provisions have adversely affected and may continue to
adversely affect revenues and profitability in the future.  There can
be no assurance that the Company will not experience significant
returns or price protection adjustments in the future or that the
Company's reserves will be adequate to cover such returns and price
reductions.

The Company increasingly relies on sales of the LanRover Access Switch
to achieve its revenue and profitability objectives.  Sales of other
communications products and other remote access products, including
the LanRover product, decreased in the first six months of fiscal 1998
and fiscal 1997, due in part to increased competition.  There can be
no assurance that the Company will be successful in modifying current
product offerings to increase sales of its products.

The Company depends on third party distributors and value-added
resellers for a significant portion of the Company's revenues.  The
loss of certain of these distributors and resellers could have a
material adverse impact on the Company's results of operations.
Moreover, many of these distributors and resellers also act as
resellers of competitive products.  Therefore, there is risk that
these distributors and resellers may focus their efforts on marketing
products other than those sold by the Company.  This may require the
Company to offer various incentives to such distributors and
resellers, which may adversely impact the Company's results of
operations.

The market for the Company's products is characterized by rapidly
changing technology, evolving industry standards and frequent new
product introductions.  The Company's future success will depend on
its ability to enhance its existing products and to introduce new
products and services to meet and adapt to changing customer
requirements and emerging technologies, such as VPN and other
technologies.  The introduction of new products requires the Company
to manage the transition from its older product offerings in order to
minimize the impact on customer ordering patterns, avoid excessive
levels of obsolete inventories and to ensure that adequate supplies of
new products are available to meet customer demand.

The Company's success in accomplishing development objectives depends
in large part upon its ability to attract and retain highly skilled
technical personnel including, in particular, management personnel in
the areas of research and development and technical support.
Competition for such personnel is intense.  There can be no assurance
that the Company will be successful in attracting and retaining the
personnel it requires to accomplish its objectives.  Delays in new
product development or the failure of new products to achieve market
acceptance, could have a material adverse effect on the Company's
operating results.  In addition, there can be no assurance that the
Company will be successful in identifying, developing, manufacturing
or marketing new product or service offerings or enhancing its
existing offerings.

The Company operates in a highly competitive market that is
characterized by an increasing number of well-funded competitors from
diverse industry sectors, including but not limited to suppliers of
software, modems, terminal servers, routers, hubs, data communications
products and companies offering remote access solutions based on
emerging technologies, such as switched digital telephone services,
remote access service offerings by telephony providers via telephone
networks and other providers through public networks such as the
Internet.  Increased competition could result in price reductions and
loss of market share which would adversely affect the Company's
revenues and profitability.  There can be no assurance that the
Company will be able to continue to compete successfully with new or
existing competitors.

The Company does business worldwide, both directly and via sales to
United States-based original equipment manufacturers, who sell such
products internationally. The Company expects that international
revenues will continue to account for a significant portion of its
total revenues. Although most of the Company's sales are denominated
in US Dollars, exchange rate fluctuations could cause the Company's
products to become relatively more expensive to customers in a
particular country, causing a decline in revenues and profitability

<PAGE>

in that country.  In addition, international sales, particularly in
Europe, are typically adversely affected in the third quarter due to a
reduction in business activities during the summer months.
Furthermore, global and/or regional economic factors and potential
changes in laws and regulations affecting the Company's business,
including without limitation, communications regulatory standards,
safety and emissions control standards, difficulty in staffing and
managing foreign operations, longer payment cycles and difficulty in
collecting foreign receivables, currency exchange rate fluctuations,
changes in monetary and tax policies, tariffs, difficulties in
enforcement of intellectual property rights and political
uncertainties, could have an adverse impact on the Company's financial
condition or future results of operations.

Some of the Company's products incorporate encryption, or scrambling,
features to protect the security, confidentiality, and integrity of
text or data transmissions.  Products with encryption features are
subject to export restrictions under the laws of the U.S., Canada, and
other countries.  In countries other than the U.S. and Canada,
encryption products may also be subject to import and/or use
restrictions.  These restrictions may require the Company or its
customers to obtain licenses; may require technical modifications to
products; and may prohibit sales of some products to certain
destinations or customers.  In light of these restrictions, the
Company's products available abroad may contain significantly weaker
encryption capabilities than those available in the U.S. and Canada,
and there can be no assurance that the Company will continue to be
able to export its products to destinations outside of the U.S. and
Canada.  Accordingly, these restrictions could potentially have an
adverse effect on the Company's business, financial conditions, or
results of operations.

The Company is exposed to potential credit risks as a result of
accounts receivable from distributors, resellers, OEM and direct
customers, with respect to which the Company does not generally
require collateral.

The Company is currently dependent on three subcontractors for the
manufacture of significant portions of its products.  Although the
Company believes that there are a limited number of other qualified
subcontract manufacturers for its products, a change in subcontractors
could result in delays or reductions in product shipments.  In
addition, certain components of the Company's products are only
available from a limited number of suppliers.  The inability to obtain
sufficient key components as required could also result in delays or
reductions in product shipments.   Such delays or reductions could
have an adverse effect on the Company's results of operations.

The market price of the Company's securities could be subject to wide
fluctuations in response to quarter-to-quarter variations in operating
results, changes in earnings estimates by analysts, and market
conditions in the industry, as well as general economic conditions and
other factors external to the Company.

Other factors that may affect future results include the accuracy of
the Company's internal estimates of revenues and operating expense
levels, the outcome of the litigation discussed below under "Legal
Proceedings," the Company's ability to complete all necessary Year
2000 upgrades in a timely and cost-effective manner, the realization
of the intended benefits of the 1998 restructuring, and material
changes in the level of customer-funded research and development
activities.

Because of the foregoing factors, the Company believes that period-to-
period comparisons of its financial results are not necessarily
meaningful and expects that its results of operations may fluctuate
from period to period in the future.

<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is a defendant in the following legal proceedings:
Lirette, et al. v. Shiva Corporation, et al., Civil Action No. 97-
11159-WGY, a purported class action complaint filed against the
Company, Frank Ingari, Cynthia Deysher and David Cole, in the United
States District Court for the District of Massachusetts on May 21,
1997 and Abraham Schwartz and Norman Marcus v. Shiva  Corporation,
Case No. BC164278, a purported class action complaint filed against
the Company in the Superior Court of the State of California for the
County of Los Angeles on January 17, 1997. The federal court complaint
seeks damages, interest, fees and expenses.  The state court complaint
seeks damages, interest, fees and expenses, including punitive damages
and treble damages.  The federal matter is in the pre-discovery phase,
and a motion to dismiss has been filed and is being considered by the
court.  The state matter is in discovery. The Company is unable to
determine at this time the potential liability, if any, of either of
these actions.  Accordingly, no provision has been made in the
consolidated financial statements for these claims.  It is possible
that the Company could incur a material loss related to these actions
in the future.


Item 4.  Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Stockholders (the "Annual Meeting") held on
June 18, 1998, the stockholders of the Company approved the election
of two Class I Directors.  The following table sets forth each Class I
Director elected at the Annual Meeting (with the vote results) and
each Director whose term of office extended beyond the Annual Meeting:

<TABLE>
<CAPTION>
                                Term
Name                  Class   Will Expire   For          Withheld
----                  -----   -----------   ---          --------
<S>                   <C>     <C>           <C>          <C> 
Paul C. O'Brien         I        2001       26,992,074   332,115
James L. Zucco, Jr.     I        2001       26,992,074   332,115
David C. Cole*          II       1999       N/A          N/A
Richard J. Egan         II       1999       N/A          N/A
Henry F. McCance**      III      2000       N/A          N/A
David B. Yoffie         III      2000       N/A          N/A

<FN>

* Effective June 18, 1998, Mr. Cole resigned as a member of the Board
of Directors and was replaced by Michael E. Lehman.

** Effective June 18, 1998, Mr. McCance resigned as a member of the
Board of Directors and was replaced by Carol Herod Sharer.

</TABLE>


Item 5.  Stockholder Proposals for 1999 Annual Meeting

As set forth in the Company's Proxy Statement for its 1998 Annual
Meeting of Stockholders (the "1998 Annual Meeting"), stockholder
proposals submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), for inclusion
in the Company's proxy materials for its 1999 Annual Meeting of
Stockholders must be received by the Clerk of the Company at the
principal offices of the Company no later than December 4, 1998.

<PAGE>

In addition, the Company's by-laws require that the Company be given
advance notice of stockholder nominations for election to the
Company's Board of Directors and of other matters which stockholders
wish to present for action at an annual meeting of stockholders (other
than matters included in the Company's proxy statement in accordance
with Rule 14a-8).  The required notice must be made in writing and
delivered or mailed by first class United States mail, postage
prepaid, to the Clerk of the Company at the principal offices of the
Company, and received not less than 60 days nor more than 90 days
prior to the 1999 Annual Meeting; provided however, that if less than
70 days notice or prior public disclosure of the date of the meeting
is given to stockholders, such nomination or other proposal shall have
been mailed or delivered to the Clerk not later than the close of
business on the 10th day following the date on which the notice of the
meeting was mailed or such public disclosure made, whichever occurs
first.  The 1999 Annual Meeting is currently expected to be held on
June 3, 1999.  Assuming that this date does not change, in order to
comply with the time periods set forth in the Company's by-laws,
appropriate notice would need to be provided no earlier than March 5,
1999 and no later than April 5, 1999.  The advance notice provisions
of the Company's by-laws supersede the notice requirements contained
in recent amendments to Rule 14a-4 under the Exchange Act.


Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits

<TABLE>
<CAPTION>

     Exhibit No.    Description of Exhibit
     -----------    ----------------------
     <S>            <C>
     Exhibit 10.1   Sublease Between Shiva Corporation, Landlord, and
                    Netcentric Corporation, Tenant, dated May 29, 1998.

     Exhibit 27.0   Financial Data Schedule.

</TABLE>

    (b)  Reports on Form 8-K:

    The Company filed a Current Report on Form 8-K dated April 9, 1998
    pursuant to Item 2 thereof, reporting the completion of its
    acquisition of substantially all of the assets of Isolation
    Systems, Limited, an Ontario corporation, for approximately
    US$37,000,000 in cash pursuant to an Asset Purchase Agreement
    dated as of February 18, 1998 between the Company and Isolation
    Systems, Limited.  In addition, the Company assumed substantially
    all the liabilities of Isolation Systems, Limited as part of the
    acquisition, including the payment of transaction fees associated
    with the acquisition of approximately in the aggregate of
    US$1,900,000.  On June 8, 1998 the Company filed an amendment to
    this Current Report on Form 8-K/A to include certain financial
    information with respect to Isolation Systems, Limited and the
    Company.

<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.


                                   SHIVA CORPORATION


Date:   August 18, 1998            by:  /s/ Robert P. Cirrone
                                        ---------------------
                                   Senior Vice President, Finance and
                                   Administration, and Chief Financial
                                   Officer
                                   (Principal Financial and Accounting
                                   Officer)
<PAGE>

                            SHIVA CORPORATION
                              EXHIBIT INDEX
<TABLE>
<CAPTION>

Exhibit No.    Descripton of Exhibit
-----------    ---------------------
<S>            <C>
Exhibit 10.1   Sublease Between Shiva Corporation, Landlord, and
               Netcentric Corporation, Tenant, dated May 29, 1998.

Exhibit 27.0   Financial Data Schedule.

---------------------------------------
</TABLE>

<PAGE>