<PAGE>  1
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                           UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                             FORM 10-K

          (Mark One)
      [X] Annual Report Pursuant to Section 13 or 15(d)
          of the Securities Exchange Act of 1934

          For the fiscal year ended January 3, 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 No. 0-18033

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

       Delaware                        84-0988566
(State of Incorporation)      (IRS Employer Identification No.)

                          1685 38th Street
                      Boulder, Colorado  80301
     (Address of principal executive offices, including zip code)

                      Area Code(303) 442-4333
         (Registrant's Telephone Number, including area code)

     Securities registered pursuant to Section 12(b) of the Act:
       N/A                                    N/A
(Title of each class)      (Name of each exchange on which registered)

     Securities registered pursuant to Section 12(g) of the Act:
                  Common Stock, $.001 Par Value
                        (Title of Class)

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 ninety days.

      Yes          /X/                      No          /  /

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to 
this Form 10-K.                                                       ( )

The approximate aggregate market value of the voting stock held by 
non-affiliates of the registrant as of March 2, 1998 was $152,250,509 based 
on the closing sale price on such date.  The aggregate number of shares of
common stock outstanding on March 2, 1998 was 19,333,398(a).
<PAGE>  2
Document incorporated by reference: Proxy Statement for the 1998 Annual 
Meeting of Stockholders scheduled to be held May 4, 1998: Part III, Items 
10, 11, 12, and 13.

(a) Excludes 3,146,515 shares of common stock held by directors, executive
officers and stockholders whose ownership exceeds ten percent of the common
stock outstanding at March 2, 1998.  Exclusion of shares held by any person 
should not be construed to indicate that such person possesses the power, 
direct or indirect, to direct or cause the direction of the management or
policies of registrant, or that such person is controlled by or under common
control with the registrant.
















































<PAGE> 3
PART I

Item 1.
BUSINESS.

THE COMPANY
-----------

Exabyte Corporation ("Exabyte" or the "Company") was incorporated in June 1985
under the laws of the State of Delaware.  Exabyte designs, manufactures and 
markets a full range of 8mm tape drives and 8mm, DLT(TM) and 4mm tape 
libraries.  Exabyte also provides its own brand of recording media, software 
utilities and worldwide service and support.

The Company's strategic focus is the information storage and retrieval tape 
drive market for workstations, mid-range computer systems and networks, 
primarily for data backup and archival applications.  Computer manufacturers 
and resellers require a variety of storage products which vary in price,
performance, capacity and form-factor characteristics as their needs for data 
backup and archival storage increase.  Exabyte's current strategy is to offer a
number of products to address a broad range of these requirements.

In June 1997, Exabyte segmented its operations into four divisions, each 
responsible for a specific line of products or services: the Enterprise 
division, responsible for Exabyte's line of 8mm tape drive products and media;
the Storage Automation Solutions division, responsible for robotic tape 
libraries; the Worldwide Service division, responsible for service programs and
support for Exabyte's products and customers; and the Eagle(RTM) division, 
created in 1995, responsible for Exabyte's line of minicartridge drives and 
media.  In December 1997, Exabyte announced the closure of its Eagle(RTM) 
division.

In addition to the historical information contained in this document, the 
following discussion contains forward-looking statements that involve future 
risks and uncertainties.  The actual results that the Company achieves may 
differ materially from any forward-looking statements due to such risks and 
uncertainties.  Words such as "believes," "anticipates," "expects," "intends,"
"plans" and similar expressions are intended to identify forward-looking 
statements, but are not the exclusive means of identifying such statements.
The Company undertakes no obligation to revise any forward-looking statements 
in order to reflect events or circumstances that may arise after the date of 
this report.  Factors that could cause or contribute to such differences 
include, but are not limited to, those discussed in the section entitled "RISK 
FACTORS."

PRODUCTS AND SERVICES
---------------------

The Company manufactures 8mm tape drive products and robotic libraries, which
incorporate Exabyte's own 8mm tape drives, as well as 4mm and DLT(TM) tape 
drives manufactured by others.  Exabyte's 8mm tape drives products offer data 
capacities ranging from 5GB to 40GB with data compression (described below).
These tape drive products address the mid-range to high-end server markets, the
remainder of which is largely served by 4mm and half-inch linear tape drives 
produced by competitors.  Exabyte's robotic tape libraries incorporate one or 
more tape drives and multiple media cartridges. In addition, Exabyte provides 
a variety of services for its products, as well as recording media and 
cleaning cartridges for its products.

<PAGE> 4
There can be no assurance that any of the current or announced products or 
services listed below will be successfully developed, made commercially 
available on a timely basis or achieve market acceptance.  Exabyte encounters
a number of risks in producing and selling its products and services.  For a 
description of the risks associated with Exabyte's products and services 
please refer to the "RISK FACTORS--Product Development," "RISK FACTORS--Media 
Constraints," "RISK FACTORS--Product Quality and Performance" and "RISK 
FACTORS--Management of Business and Product Transitions" sections below.

8mm Tape Drive Products
=======================

Exabyte's 8mm tape drive products and media are the responsibility of the 
Enterprise division.  These products address the mid-range markets including 
UNIX, and NT server markets and are sold primarily to Exabyte's reseller and
original equipment manufacturer ("OEM") customers.  In 1997, sales of 8mm tape 
drive products represented 59% of revenue, while in 1996 and 1995, sales 
represented 65% and 60% of total revenue, respectively. Exabyte's 8mm tape 
drive products are based on helical scan technology and utilize a SCSI 
interface.  The tape drive products also incorporate a licensed compression 
algorithm for data compression.  All data capacities and transfer rates 
indicated for the products listed below assume a compression ratio of two to 
one.  Actual compression will vary depending on the nature of the data and the 
drive and media quality.

The primary factors distinguishing the Company's tape drive products from one 
another are form factor, data capacity, and transfer rate. 

         Form Factor -  the physical size of the device with respect to 
         industry standard formats.  

         Data Capacity - the total amount of data which can be stored on a 
         single media cartridge.

         Transfer Rate - the speed that data may be transferred to or from the 
         tape drive.  

Current 8mm Tape Drive Products
-------------------------------

Exabyte Mammoth

The Company's Mammoth 8mm tape drive targets large department networks and 
application servers and may be incorporated into most of Exabyte's 8mm 
libraries. Mammoth is Exabyte's fastest, highest capacity 8mm tape drive with a
data capacity of 40GB and a transfer rate of 6MB per second.  Mammoth features 
an industry-standard 5 1/4" half-high form factor and is compatible with all 
Exabyte 8mm tape drive products.  Mammoth is dependent upon and only writes to 
Advanced Metal Evaporated ("AME") media, but can read media cartridges written 
by Exabyte's other 8mm tape drive products.  AME media is supplied to Exabyte 
exclusively by Sony Corporation, a competitor to the Company.  The Company has 
experienced constraints in the supply of AME media.  Please refer to the "RISK 
FACTORS--Media Constraints" and "RISK FACTORS--Supplier Dependence" sections 
below.





<PAGE> 5
Exabyte Eliant(TM) 820

The Eliant(TM) 820 tape drive, which targets mid-range networks and smaller 
mixed workstations, features a 14GB data capacity and a transfer rate of 2MB 
per second.  The Eliant(TM) 820 may be incorporated into Exabyte's 8mm 
libraries and comes in an industry-standard 5 1/4" half-high form factor.

Exabyte 8700

The Exabyte 8700, which targets entry-level networks, features a data capacity 
of 14GB and a 1MB-per-second transfer rate.  The Exabyte 8700 comes in a stand-
alone design that includes its own power supply and is housed in a desktop 
enclosure.

Media
-----

Exabyte provides various types of media cartridges, as well as cleaning 
cartridges and data cartridge holders, for its 8mm tape drive products.  The 
high-quality media, produced by one or more third parties, is available in 
different lengths to handle various data storage requirements.  The growth of 
Exabyte's Mammoth and follow-on Mammoth drives is dependent upon the supply of 
AME media.  There are several risks associated with Mammoth media dependence.
For a description of those risks, please refer to the "RISK FACTORS-- Media 
Constraints" section below.  Sales of media and media related products 
represented approximately 15%, 12% and 9% of sales in 1997, 1996 and 1995,
respectively.

Robotic Tape Library Products
=============================

Exabyte's robotic tape libraries and associated products are the responsibility
of the Storage Automation Solutions division. Exabyte offers a family of 
robotic tape libraries which automate the storage and retrieval of substantial 
amounts of data.  Each library incorporates one or more tape drives and 
multiple media cartridges.  The primary sales channels for Exabyte's robotic 
tape libraries are OEMs and resellers.  The libraries are targeted for use in 
applications ranging from small department networks to large application 
servers.  In 1997, revenues from robotic tape library sales were 18% of total 
revenue, while in both 1996 and 1995, sales represented 14% of revenues.  The 
Company's robotic tape libraries typically provide relatively higher levels of 
profit margin contribution to the Company's results of operations.  Any 
shortfall in the sale of these products would have a relatively higher negative
effect on the Company's margins than the Company's other products.  All data 
capacities and transfer rates indicated for the products listed below assume a
compression ratio of two to one.  Actual compression will vary depending on the
nature of the data and the drive and media quality.

Current Robotic Tape Library Systems
------------------------------------

Exabyte 440/480

The Exabyte 440 and 480 libraries target large enterprise application servers 
and networks and support applications such as unattended network backup/
restore.  These libraries represent Exabyte's largest capacity library 
offerings.  The Exabyte 440 incorporates up to four 8mm tape drives and up to 
40 media cartridges, while the Exabyte 480 incorporates up to four 8mm tape 
drives and up to 80 media cartridges (the Exabyte 440 can be upgraded to an 
<PAGE> 6
Exabyte 480 library.)  At full capacity (four Mammoth tape drives and 80 media
cartridges) the Exabyte 480 offers a data capacity of 3.2TB and a transfer rate 
of 24MB per second.  The libraries feature a standard bar code scanner and come 
in both rack and tower configurations.

Exabyte 210/220

The Exabyte 210 and 220 libraries target small and large department networks, 
respectively, as well as mid-range file and application servers.  Their 
applications include unattended network backup/restore.  The Exabyte 210 
library incorporates up to two 8mm tape drives and up to 10 media cartridges,
while the Exabyte 220 library incorporates up to two 8mm tape drives and up 
to 20 media cartridges (the Exabyte 210 can be upgraded to an Exabyte 220 
library).  At full capacity (two Mammoth tape drives and 20 media cartridges), 
the Exabyte 220 offers a data capacity of 800GB and a transfer rate of 12MB per 
second.  The libraries feature a bar code scanner (standard on the Exabyte 
220) and come in both rack and tower configurations.

Exabyte 10h

The Exabyte 10h library targets small department networks and supports 
applications such as network backup/restore.  The Exabyte 10h incorporates one 
Eliant(TM) 820 tape drive and up to 10 media cartridges.  At full capacity, the
Exabyte 10h library offers a data capacity of 144GB and a transfer rate of 2MB 
per second.

Exabyte 218

The Exabyte 218 library, Exabyte's 4mm tape library, targets small to mid-sized
department networks and supports applications such as network backup/restore.
The Exabyte 218 incorporates up to two DDS-2 4mm tape drives and up to 18 media 
cartridges, and comes in both rack and tower configurations.  At full capacity,
the Exabyte 218 offers a data capacity of 144GB and a transfer rate of 2MB per 
second.

Exabyte 18D

The Exabyte 18D is Exabyte's first DLT(TM) library.  The Exabyte 18D targets 
small department networks and mid-range file and application servers.  The 
Exabyte 18D supports such applications as unattended network backup/restore. 
The Exabyte 18D library incorporates a single DLT(TM) 4000 or DLT(TM) 7000 tape
drive from Quantum Corporation ("Quantum") and up to eight media cartridges.
At full capacity (with a DLT(TM) 7000 drive), the Exabyte 18D offers a data 
capacity of up to 560GB and a transfer rate of up to 10MB per second.  The 
Exabyte 18D also comes in both rack and tower configurations.

Announced Robotic Tape Library Systems
----------------------------------------

Exabyte 230D

The Exabyte 230D is Exabyte's most recent DLT(TM) library offering.  The 
Exabyte 230D targets large client-server and department networks and supports 
applications such as unattended network backup/restore.  The Exabyte 230D 
incorporates up to two Quantum DLT(TM) 4000 or DLT(TM) 7000 tape drives and 
up to 30 media cartridges.  At full capacity (with two DLT(TM) 7000 tape 
drives), the Exabyte 230D offers a data capacity of 1.2TB and a transfer rate 
of 20MB per second.  The Exabyte 230D features a standard bar code scanner, 
comes in both rack and tower configurations and is field upgradable to future 
<PAGE> 7
DLT(TM) library offerings.  Worldwide shipping of the Exabyte 230D to customers
is scheduled to begin in the first half of 1998.

There can be no assurance that this or any announced or unannounced product 
will be successfully developed, made commercially available on a timely basis 
or achieve market acceptance.  Please refer to the "RISK FACTORS--Product 
Development" section below.

Service
=======

Exabyte's Worldwide Service division provides a full range of in-warranty and
out-of-warranty support services for Exabyte's library, tape drive, and media 
products.  These services, which are delivered through a worldwide network of 
service centers and authorized service providers, support Exabyte OEM, reseller 
and end-user customers in the deployment, operation and maintenance of Exabyte 
products.

The service programs offered by the Worldwide Service division for Exabyte's
products and media include those listed below:

         Products                                     Service Programs
         --------                                     ----------------
         Robotic Tape Libraries.......................Hardware conversions
                                                      Parts support
                                                      Depot repair
                                                      On-site service
         8mm Tape Drive Products......................Extended warranties
                                                      Hardware upgrades
                                                      Depot repair
                                                      Next-day advance exchange
         Media........................................Warranty exchange
                                                      Data recovery
                                                      Media conversions

In 1997, revenue from service and support programs accounted for 7% of total 
revenue, while in both 1996 and 1995 these programs accounted for 6% of 
revenues. 

Minicartridge Tape Drive Products
=================================

During 1997, Exabyte's Eagle(RTM) division was responsible for the Eagle(RTM) 
line of minicartridge tape drive products and related media.  These products 
targeted the desktop PC and PC server markets.  The Eagle(RTM) division's 
primary sales channels were resellers and retailers, although the division 
began marketing its products to OEMs in 1997.
        
The Company announced the closure of its Eagle(RTM) division in December 1997
and took certain restructuring charges related to the closure.  See 
RESTRUCTURING CHARGES in the Management's Discussion and Analysis section 
below.

In 1997, sales of minicartridge tape drive products represented 6% of total 
revenue, while in 1996 and 1995, sales accounted for 5% and 2% of revenue, 
respectively.



<PAGE> 8
MARKETING AND CUSTOMERS
-----------------------

Exabyte markets its products worldwide to OEMs and resellers. Initial sales of 
new products are often made to resellers who are usually quicker to evaluate, 
integrate, and adopt new technology. OEM sales generally increase as the new 
product successfully completes the necessary qualification process.  For a 
description of the risks associated with Exabyte's customers and customer 
dependence, please refer to the "RISK FACTORS--Customer Dependence," "RISK 
FACTORS--Market Demand" and "RISK FACTORS--Year 2000" sections below.

OEMs
----

OEM customers incorporate Exabyte drives as part of their own systems.  Exabyte
works with its OEM customers during early product development stages to help 
ensure its products will readily integrate into these customers' systems.

The sales cycle for an OEM typically covers many months.  During this time, 
the OEM evaluates the technology, qualifies the product specifications and 
verifies Exabyte's compliance with product specifications.  The OEM then 
integrates the product into its system and publicly announces the integration 
toward the end of the sales cycle before volume shipments of Exabyte's products
are made to the OEM.  Product sales to OEMs represented 49% of total sales in 
1997. In 1996 and 1995, these sales were 51% and 55%, respectively, of total 
sales.

Resellers
---------

The Company's reseller customers purchase products for resale and may provide
all or some of the following services: distribution, system upgrades, value-add
or other services. Resellers may use the Company's tape drive products to 
upgrade various types of installed computer systems, including those 
manufactured by IBM, Sun Microsystems and Digital Equipment Corporation.  
Some resellers package the Company's tape drives into a stand-alone enclosure 
containing a power supply and software for attachment to the end-user's system.
Resellers may also combine the Company's products with other storage devices, 
such as single or multiple disk drives, to deliver a value-added storage 
solution.  Resellers also distribute Exabyte's products to OEMs and end-users.
The Company often supports some of its reseller customers by providing 
marketing and technical support directly to their customers, thereby 
incurring certain additional costs for such sales.  Other costs and risks 
associated with the reseller business include inventory price protections, 
stock rotation obligations and customer rebates.  The reseller business is 
also characterized by relatively short order lead times which limit the 
Company's ability to forecast sales to these customers.  Please refer to the 
"RISK FACTORS--Market Demand" section below.  Sales to resellers represented 
approximately 46%, 45% and 42% of sales in 1997, 1996 and 1995, respectively.

International
-------------

Exabyte also markets its products overseas directly to OEMs, as well as through
resellers to OEMs and end-users.  Each of the Company's international markets 
is served by resellers with rights to sell the Company's products in a country 
or group of countries.  Direct international sales accounted for approximately 
32%, 30%, and 31% of sales in 1997, 1996, and 1995, respectively. (See Note 9 
of Notes to Consolidated Financial Statements.)  In addition, many of Exabyte's
<PAGE> 9
domestic customers ship a significant portion of Exabyte's products to their 
overseas customers.  Currently, a very small percentage of the Company's 
international sales are denominated in foreign currencies and are affected by 
foreign exchange rate fluctuations.  In addition, changes in the foreign 
exchange rates may adversely affect the volume of sales denominated in U.S. 
dollars to overseas customers.  Exabyte's sales are also subject to risks 
common to export activities, including government regulation or seizure of 
property, tariffs, and import restrictions.  For a description of these and 
other risks associated with international sales, please refer to the "RISK 
FACTORS--Foreign Sales" section below.

Principal Customers
-------------------

A partial list of Exabyte's customers includes Anthem, Bull S.A., Consan, 
Digital Equipment Corporation, IBM, Ingram Micro, Merisel, NCR, Siemens 
Nixdorf, Sun Microsystems and Tech Data.

IBM and Sun Microsystems were the only two customers accounting for 10% or more
of Exabyte's sales during the previous three fiscal years.  IBM accounted for 
17% of sales in 1997 and 15% of sales in both 1996 and 1995.  Sun Microsystems
accounted for 13% of sales in 1997 and 11% of sales in both 1996 and 1995.  

In addition, Exabyte's three largest customers accounted for 39% of sales in 
1997. There are many risks associated with Exabyte's dependence on its key 
customers, including the loss of a key customer and substantial cancellations 
or rescheduling of customer orders.  For a description of these and other risks
associated with Exabyte's customers and customer dependence, please refer to 
the "RISK FACTORS--Customer Dependence" and "RISK FACTORS--Market Demand" 
sections below.

COMPETITION
-----------

The data storage market is extremely competitive and subject to rapid 
technological change.  The Company believes that competition in the data 
storage market will continue to increase.  Manufacturers of all types of 
storage technologies compete for a limited number of customers.  The Company
believes that the main competitive factors considered by these customers are:

       -  storage capacity
       -  data transfer rate
       -  form factor
       -  price/performance
       -  innovation                             
       -  product quality and reliability
       -  timing of new product introductions
       -  volume availability
       -  customer support
       -  the Company's financial strength

Numerous companies are engaged in the research, development and 
commercialization of data storage products, including computer manufacturers 
such as IBM and Hewlett-Packard, that incorporate their own storage products 
into their systems.  Some of the Company's current and potential competitors 
have significantly greater financial, technical, and marketing resources than
Exabyte.  There can be no assurance that they will not devote those resources 
to the aggressive marketing of helical scan, minicartridge, half-inch 
cartridge, optical or other storage product technologies.
<PAGE> 10
Future developments of tape and optical technologies, as well as new forms of 
storage technologies, could create additional, significant competition to 
Exabyte.  Other risks include loss of market share, price erosion and pricing 
pressure.  For a description of these and other risks associated with Exabyte's 
competition, please refer to the "RISK FACTORS--Competition" section below. 

Exabyte's 8mm tape drive products face competition from companies offering 
8mm, half-inch, 4mm and minicartridge tape drive products.  Exabyte's largest 
8mm competitor is currently Sony with its new AIT tape drive.  There can be 
no assurance that other companies will not enter the 8mm market in the future.
Sony also offers a competitive 4mm tape drive.  4mm tape drives are typically 
lower in price and smaller in size, making them more attractive to the low end 
of the market and those systems with a smaller form factor.  

Among Exabyte's competitors which offer half-inch tape drive products are 
Quantum, Fujitsu, IBM, Overland Data and StorageTek.  The half-inch products 
currently being offered generally have higher capacities and transfer rates 
than Exabyte's products.  Specifically, Quantum's DLT(TM) 7000 drive competes 
in the same market segment as Exabyte's Mammoth drive, but offers storage 
capacities and transfer rates greater than Mammoth or any of Exabyte's other 
current tape drive products.

Additionally, certain of the Company's low-end 8mm tape drive products compete 
with minicartridge tape drives.  Minicartridge products offer some advantages 
over the Company's low-end 8mm tape drive products, including compatibility of 
new products with the larger installed base of earlier generation minicartridge 
tape drives, and are generally lower in price and better suited for this market 
segment.  If higher capacity minicartridge tape drive products are successfully
introduced, such products could represent a more significant competitive 
challenge to Exabyte's 8mm tape drive products.  Exabyte's primary 
minicartridge competitors are Seagate, Hewlett-Packard, Tandberg, Iomega and 
Tecmar.

The Company's library product offerings face direct competition from other 
companies manufacturing their own library offerings.  Some of Exabyte's major 
8mm library competitors are IBM, Qualstar, ADIC and Spectralogic.  Among 
Exabyte's DLT(TM) library competitors are ADIC, ATL, Hewlett-Packard, Quantum,
Breece Hill, and StorageTek.  Major 4mm library competitors are IBM, Qualstar,
ADIC, Hewlett-Packard, StorageTek, Spectralogic and Seagate.  Because 
Exabyte's library products represent higher-margin business to the Company, 
any shortfall in the sale of these products, due to competition or otherwise, 
would have a proportionately greater impact on the Company's results of 
operations.

Additionally, Exabyte's service programs are under competition from third party 
service providers, including Tech Support Services International, RC 
Electronics and ElectroService Labs.

MANUFACTURING
-------------

Exabyte currently manufactures parts or complete units of its 8mm tape drive 
and library products at its Boulder, Colorado facility.  Exabyte's Scotland 
facility customizes generic tape drives to meet customer-specific requirements 
for Exabyte's European customers.  The Company currently employs just-in-time 
manufacturing techniques emphasizing flexibility and continuous product flow.
These techniques depend on uninterrupted access to high-quality, competitively 
priced components in required volumes. The Company has a large number of sole-
source dependencies.  Exabyte has executed master purchase agreements with some 
<PAGE> 11
of its sole-source suppliers, and conducts business with the rest of its 
suppliers on a purchase order basis.  Please refer to the "RISK FACTORS--
Supplier Dependence" section below.  Further, many such components are sourced 
from suppliers located outside the U.S.  Please refer to the "RISK FACTORS--
Foreign Exchange and Import Restrictions" section below.

Exabyte obtains much of the materials and components necessary for 
manufacturing its products from its German subsidiary, Exabyte Magnetics GmbH 
("EMG"), as well as from a number of suppliers.  Many of the key components 
are made to the Company's specifications and are acquired from sole sources.  
Please refer to the "RISK FACTORS--Supplier Dependence" and "RISK FACTORS--
Mammoth" sections below.

The Company manufactures a mechanical deck mechanism for the Company's Mammoth 
product.  Production of this deck assembly requires a more complex 
manufacturing process than the Company had previously undertaken.  Difficulties 
in manufacturing this deck assembly have caused production constraints for 
Mammoth in the past.  There can be no assurance that such problems will not 
occur again in the future.  For a description of the risks associated with the 
Company's Mammoth product, please refer to the "RISK FACTORS--Mammoth" and 
"RISK FACTORS--Media Constraints" sections below.

Among the many key components for Exabyte's products, and the supplier(s) 
supplying the components are:

                                            Sole-Source
         Component                          Supplier(s)
         ---------                          ---------               
         8mm tape decks.....................Sony                    
                                            Hitachi                 
         Circuit boards.....................Solectron
                                            EFTC
         Recording heads....................ReadRite
                                            EMG                   
         AME Media..........................Sony

Two of Exabyte's biggest sole-source suppliers are Sony Corporation ("Sony") 
and Hitachi Corporation ("Hitachi"), both supplying customized 8mm tape decks 
to the Company.

The relationship with Sony as a supplier of 8mm tape decks began in 1987.  Sony
currently supplies customized tape decks for Exabyte's 8205XL and 8505XL 8mm 
tape drives. In April 1997, the Company initiated end-of-life programs with 
respect to these two products.  The controlling supply agreement, entered into 
by Exabyte, Nihon Exabyte Corporation (Exabyte's wholly owned Japanese 
subsidiary) and Sony, terminates in March 1998.  Exabyte does not intend to 
renew this agreement.  The parties are currently negotiating an amendment to 
the contract to terminate the contract and end the supply of 8mm tape decks as 
of August 1998.  The Company expects that the amendment, if executed, would 
provide for the supply of spare parts related to the tape decks supplied by 
Sony.  Such spare parts are of importance to Exabyte's Worldwide Service 
division.  Exabyte does not currently have a second source for these spare 
parts, and any constraint in the supply could affect the Worldwide Services 
division's ability to successfully service and maintain Exabyte's 8205XL and 
8505XL tape drives, both in- and out-of-warranty, and could have a material 
adverse effect on the Company's results of operations.



<PAGE> 12
Hitachi currently supplies the tape deck components for Exabyte's 8700 and
Eliant(TM)820 8mm tape drives.  The components incorporated into these products
are customized to the Company's specifications.  The purchase agreement for the
Exabyte 8700 tape deck component was entered into among Exabyte, Nihon Exabyte 
Corporation, and Hitachi on February 22, 1995 and was automatically renewed in 
February 1998 for an additional 12 months, per the terms of the agreement.  The 
parties entered into a separate agreement on December 11, 1996, for the supply 
of the Eliant(TM)820 tape deck component.  Both agreements have a term of three 
years, subject to two automatic 12-month extensions.

While both Hitachi purchase agreements contain certain restrictions regarding 
the sale of Hitachi's tape decks or customized parts to third parties, such 
limitations do not prevent Hitachi from individually developing similar 
components and selling such components to third parties or incorporating such 
components into its own competitive products.

There can be no assurance that the supply of these decks or spare parts from 
Sony or Hitachi will continue or that prices will remain at their current 
levels.  The Company's inability to obtain decks or spare parts at a 
commercially reasonable cost would cause a significant delay or even 
termination of the production of these 8mm tape drives, and would have a 
material adverse effect on the Company's competitive position and its results 
of operations.

For a description of these and other risks associated with Exabyte's suppliers,
please refer to the "RISK FACTORS--Year 2000","RISK FACTORS--Supplier 
Dependence" and "RISK FACTORS--Foreign Sourcing" sections below.

Exabyte also contracts with third parties to manufacture product components.  
For a description of the risks associated with manufacturing, please refer to 
the "RISK FACTORS--Third Party Contract Manufacturing" and "RISK FACTORS--
Patent Infringement and Proprietary Rights" sections below.

RESEARCH AND DEVELOPMENT
------------------------

Exabyte participates in an industry that is subject to rapid technological 
changes and believes its future success depends on its ability to extend its 
technology and further the development of highly reliable tape drive products 
with competitive price performance characteristics.  The Company focuses its 
research and development efforts primarily on developing new products with 
improved price performance and enhancing its current products.  There are 
numerous risks associated with Exabyte's research and development efforts.  For 
a description of these risks, please refer to the "RISK FACTORS--Product 
Development" section below.

The Company's research and development expenses were approximately $40.9 
million, $38.4 million and $37.0 million in 1997, 1996 and 1995, respectively.
Except for certain software development costs, the Company's research and 
development costs are expensed as incurred.

PATENTS AND PROPRIETARY INFORMATION
-----------------------------------

Exabyte relies on a combination of patents, copyright and trade secret 
protections, non-disclosure agreements, and licensing arrangements to establish
and protect its proprietary rights.  As of February 23, 1998, Exabyte owned 46 
United States patents and had 36 United States patent applications pending 
(five of which have been allowed but have not yet issued), all relating to 
<PAGE> 13
technologies and other aspects of Exabyte tape drive and robotic tape library 
products.  However, the Company believes that, because of the rapid pace of 
technological change in the tape storage industry, factors such as knowledge, 
ability and experience of Exabyte's employees, new product introductions and 
frequent product enhancements are often more significant than patent and trade
secret protection.

Exabyte licenses its technology to third party manufacturers to allow them to 
manufacture Exabyte's products.  Additionally, Exabyte has granted 
manufacturing licenses to certain customers which allow them to manufacture and
sell the Company's products should specific events occur, such as the Company's 
inability to perform its supply obligations.  Exabyte also enters into joint 
development agreements with third parties for the development of product 
components.  Under these agreements, the third parties generally have joint 
ownership of certain technologies related to the component being developed.
The dissolution of these agreements could result in significant costs and other 
risks to the Company.  Please refer to the "RISK FACTORS--Patent Infringement 
and Proprietary Rights" section below.

There are a number of risks associated with Exabyte's proprietary rights.  For
a description of these risks, please refer to the "RISK FACTORS--Patent 
Infringement and Proprietary Rights" and "RISK FACTORS--Third Party Contract 
Manufacturing" sections below.
 
BACKLOG
-------

Backlog consists of purchase orders for which a delivery schedule within six
months has been specified by the customer.  The Company's backlog as of 
January 3, 1998 and December 28, 1996 totaled approximately $22.0 million and 
$28.9 million, respectively.  The Company's customers typically are not 
obligated to purchase minimum quantities of the Company's products.  Lead times
for the release of purchase orders depend upon the scheduling practices of each
customer.  The Company believes that the rate of new orders will vary 
significantly from month to month.  Customers may cancel or reschedule orders 
without significant penalty.  In addition, the Company's actual shipments 
depend upon its production capacity and component availability. For these 
reasons, the Company's backlog as of any particular date may not be indicative 
of the Company's actual sales for any succeeding fiscal period.  For a 
description of these and other risks associated with Exabyte's backlog 
management, please refer to the "RISK FACTORS--Inventory Write-downs and 
Special Charges" and "RISK FACTORS--Customer Dependence" sections below. 

FOREIGN EXCHANGE AND IMPORT RESTRICTIONS
----------------------------------------

Many of the Company's key components and products are currently or may be 
manufactured overseas in countries such as Japan, Germany, The Netherlands, 
China and Singapore.  Additionally, a substantial portion of Exabyte's products
incorporate subassemblies and components purchased from Japanese or other 
overseas suppliers in yen or another foreign currency.  The Company's results 
of operations, therefore, may be materially affected by fluctuations in 
currency exchange rates.  The Company enters into foreign currency forward 
contracts to hedge the purchase of certain inventory components from Japanese 
suppliers.  (See Note 1 of Notes to the Consolidated Financial Statements.)  

Exabyte's international involvement is also subject to other risks common to 
foreign operations, including government regulations, foreign exchange or 
import restrictions or tariffs imposed by the U.S. Government on products or 
<PAGE> 14
components shipped from another country.  Additionally, the sale of Exabyte's 
products to domestic federal or state agencies may be limited by the Buy 
America Act or the Trade Agreement Act to the extent the Company incorporates 
into its products components produced overseas.

The Company's subsidiaries located in The Netherlands, Germany, Japan, Canada 
and Singapore operate under their respective local currencies.  (See Note 1 
of Notes to the Company's Consolidated Financial Statements.)  As a result, any
amounts payable to a subsidiary or owed by a subsidiary are subject to the 
foreign exchange rate between the U.S. dollar and the respective local currency
and could have a material effect on the Company's results of operations.  In 
addition, the Company's foreign operations are subject to the risks generally 
applicable to the conduct of business in such countries.  

For a description of these and other risks associated with Exabyte's foreign 
involvement, please see the "RISK FACTORS--Foreign Operations," "RISK FACTORS--
Foreign Sourcing" and "RISK FACTORS--Foreign Sales" sections below.

EMPLOYEES
---------

As of February 28, 1998, the Company had 1,229 full-time and part-time 
employees and 94 temporary or contract employees for a total of 1,323 
employees.  Of the Company's total employees, 110 were employed in the 
Automation Solutions division, 360 in the Enterprise division, 374 in the 
Worldwide Service division, 26 in the Eagle(RTM) division, 114 in sales, 90 
in customer/technical support, 40 in marketing, 136 in quality and business 
systems and 73 in general and administration.  None of the Company's employees
is represented by a labor union although EMG is subject to an organized Works 
Council.

The Company reduced its workforce in October 1997 and again in January 1998, 
primarily as a result of its decision to close the Eagle(RTM) division.  These 
reductions have resulted in the involuntary termination of approximately 163 
employees, to date.

The Company faces extreme competition for key employees. Success depends to a 
significant extent upon the ability to attract, retain and motivate key 
engineering, marketing, sales, manufacturing, support and executive personnel.
For a description of the risks associated with retaining key employees, please 
refer to the "RISK FACTORS--Key Employees" section below.

RISK FACTORS
------------

Media Constraints
-----------------

The Company is currently experiencing a shortage of the AME media used in its 
Mammoth tape drive.  Exabyte's ability to sustain growth in the Mammoth line 
depends on the availability of this media, which is produced to the Company's 
specifications.  Currently, the AME media is sourced exclusively from Sony, a 
direct competitor of Exabyte.  In the event such media is not available in 
sufficient volume, at an acceptable quality level and at a competitive price, 
the Company could be forced to delay or cancel shipments of current Mammoth 
tape drive products, including associated libraries, or the introduction of
future Mammoth tape drive products, which could have a material adverse effect 
on the Company's competitive position and its results of operations.

<PAGE> 15
The Company's ability to obtain an adequate supply of this media has been, is 
currently and may be further affected by any constraint in Sony's production 
of the media, the divergence of Sony's limited media supply to other third 
parties, any change in Sony's media specification which would no longer meet 
the Company's requirements, or otherwise as a result of Sony's competitive 
position.  The Company is currently attempting to obtain a second source for 
the production of advance tape media.  However, there can be no assurance that 
its production of the media will be in the volume or of the quality required by 
the Company.

Supplier Dependence
-----------------

The Company relies on sole-source suppliers for certain critical components.  A
reliance on sole-source suppliers involves several risks, including possible 
shortage of certain key components and reduced control over delivery schedules,
manufacturing yields, quality and costs.  The Company has experienced problems 
with the quality of and interruptions in the supply of sole-source components 
in the past.  Any future yield, quality, delivery or supply problems with any 
of these suppliers could force Exabyte to delay or cancel shipments of its 
products, which could have a material adverse effect on the Company's 
competitive position and its results of operations.

Specifically, because the Company depends on Sony and Hitachi as principal 
sources for their 8mm mechanical tape decks in Exabyte's 8mm tape drive 
products (excluding Mammoth), the Company may encounter delays in or 
termination of the production of these 8mm tape drive products should Sony 
and/or Hitachi encounter any of the problems previously listed regarding sole-
source suppliers.  While Exabyte has supply contracts with both Sony and 
Hitachi, there can be no assurance that the supply of tape decks or spare 
parts will continue at required levels, or that prices will remain at the 
current levels.

Additionally, while there are other suppliers of 8mm decks, the Company has no
assurances these parties would enter into supply agreements for the tape decks.
Customizing tape decks for the Company's tape drive products would require many 
months of effort.  There can be no certainty that such efforts would be 
successful, or, even if successful, that they would not result in a significant 
delay in the shipment or even termination of the production of one or more of 
the Company's tape drive products.

The Company relies solely on Quantum, a competitor of the Company, to supply 
the DLT(TM) tape drives for Exabyte's DLT(TM) libraries.  The Company may 
encounter delays in shipping or termination of the production of its DLT(TM) 
libraries should Quantum encounter any of the problems described above
regarding sole-source suppliers.  Exabyte does not have a purchase agreement 
with Quantum for the supply of its DLT(TM) tape drives, and as such, there can 
be no assurance that the supply or price of the DLT(TM) tape drives will 
continue at their current levels.  

The Company has also engaged other third parties, including competitors and 
potential competitors, in the joint development of products or components, and
may do so again in the future.  These relationships subject Exabyte to supply 
or technology dependencies (see "RISK FACTORS--Patent Infringement and 
Proprietary Rights").




<PAGE> 16
Mammoth
-------
Mammoth incorporates a deck assembly mechanism manufactured the Company.  Prior 
to the introduction of Mammoth, the Company's manufacturing experience was 
largely limited to assembling and testing components purchased from third 
parties.  Production of the Mammoth deck assembly requires a complex 
manufacturing process that the Company had never undertaken before.  

EMG develops, manufactures and supplies scanners and recording heads, a key 
component of Exabyte's Mammoth product.  This component requires a high degree 
of manufacturing and technical expertise.  The Company has previously 
experienced a delay in the introduction of Mammoth caused in part by the 
inability of EMG to supply a sufficient number of high-quality parts.  There 
can be no assurance that the Company will not again experience such production 
constraints, which could have a material adverse effect on the Company's 
results of operations.

Customer Dependence        
-------------------        

IBM and Sun Microsystems accounted for 17% and 13%, respectively, of Exabyte's
sales in 1997. In addition, Exabyte's three largest customers accounted for an
aggregate of 39% of sales in 1997.  These customers are not required to 
purchase a minimum quantity of the Company's products and may cancel or 
reschedule orders without significant penalty.  The loss of one or more of 
these customers or substantial cancellations by these customers would have a 
material adverse effect on the Company's results of operations.  The Company 
has experienced delays in receipt of purchase orders and, on occasion,
anticipated purchase orders have been rescheduled or have not materialized due 
to changes in customer requirements. In addition, significant rescheduling or 
deferrals of orders by any of these customers could cause substantial 
fluctuations in the Company's quarterly results. Additionally, Exabyte's 
library products represent higher-margin business to the Company.  Any 
shortfall in the sale of these products would have a greater adverse impact on 
the Company's results of operations.

Market Demand
-------------

The Company believes that the demand for its products is substantially 
dependent upon the demand for workstations, mid-range computer systems and 
networks.  These markets tend to be volatile and subject to market shifts, 
which may or may not be discernible in advance by Exabyte.  A slowdown in the 
demand for such products could have a material adverse effect on the demand 
for the Company's products in any given period.  Any demand weakness, 
particularly in the reseller channel, which generally represents higher-
margin sales, could have a greater impact on profitability and a material 
adverse effect on the Company's results of operations.  Additionally, 
inaccuracies in market demand forecasts can quickly result in either 
insufficient or excessive inventories and disproportionate overhead expenses.

Patent Infringement and Propriety Rights
----------------------------------------

The Company relies on a combination of patents, copyright and trade secret 
protection, non-disclosure agreements and licensing arrangements to establish
and protect its proprietary rights.  However, the Company believes that because
of the rapid pace of technological change in the tape storage industry, factors

<PAGE> 17
such as knowledge, ability and experience of Exabyte's employees, new product 
introductions and frequent product enhancements are often more significant than
patent and trade secret protection.

Although Exabyte continues to file patent applications for its products, there 
can be no assurance that patents will issue from any pending applications or, 
if patents do issue, that any claims allowed will be broad enough to protect 
the Company's technology.  In addition, there can be no assurance that any 
patents issued to the Company will not be challenged, invalidated, or 
circumvented, or that any rights granted thereunder would provide proprietary 
protection to the Company.

The Company has received in the past, and may receive in the future, 
communications from third parties asserting that the Company's products 
infringe their proprietary rights.  The Company has also received letters from
third parties seeking indemnification from infringement against other third 
parties.  There can be no assurance that any of these claims will not result in
prolonged and costly litigation. While it may be necessary or desirable in the 
future to obtain licenses relating to one or more of Exabyte's products or 
current or future technologies, there can be no assurance that the Company will 
be able to do so on commercially reasonable terms. The inability to obtain any 
required license or to obtain such license on commercially reasonable terms 
could have a material adverse effect on the Company's results of operations.   

Although the Company continues to implement protective measures and intends to 
defend its proprietary rights, policing unauthorized use of the Company's 
technology or products is difficult and there can be no assurance that these 
measures will be successful.  In addition, the laws of certain foreign 
countries may not protect the Company's proprietary rights to the same extent 
as do the laws of the United States.

Additionally, the mechanized deck assembly incorporated in Mammoth is produced 
by the Company rather than supplied from a third party.  As such, the Company 
does not benefit from supplier indemnification regarding patent or other 
intellectual property infringement.  There can be no assurance that the 
manufacture and/or sale of Mammoth will not infringe the proprietary rights of 
third parties.

The Company has entered into agreements with third parties providing for the 
joint development of certain products or components.  The termination or 
dissolution of such agreements could result in disputes over the respective 
ownership of the underlying technology.  The Company entered into a joint 
development agreement with Philips Electronics for the development of certain 
key components.  The Company is currently in discussions with Philips 
Electronics regarding the terms and conditions of the dissolution of this 
agreement.

Competition
-----------

The tape storage market is highly competitive and subject to rapid technology 
change, and the Company expects competition to increase.  Competition has 
resulted in price erosion of Exabyte's products in the past and is expected to 
occur in the future.  The Company may also face more significant competitive 
challenges in the future in the form of loss of market share, pricing pressure 
and otherwise, particularly in the library market.  Numerous companies are 
engaged in researching, developing, and commercializing data storage products.
Additionally, some of the Company's current and prospective competitors have 
significantly greater financial, technical, manufacturing and marketing 
<PAGE> 18
resources than Exabyte.  There can be no assurance that these competitors will 
not devote their resources to the aggressive marketing of storage product
technologies, to which there can be no assurance that these technologies will 
not be equivalent or superior to the Company's technology or which render the 
Company's products obsolete or non-competitive.  The Company's ability to 
successfully compete in the tape storage market depends, in part, on accessing
and adapting to any such technological changes. In addition, the industry has 
experienced a number of consolidations which have increased and may continue to
increase the competitive pressures on Exabyte.

The Company faces competition directly from 8mm tape drives produced by other 
companies, particularly Sony (who also produces tape decks and AME media for 
Exabyte) and indirectly from half-inch, 4mm and minicartridge tape drives 
produced by others.  Some of these products offer greater data capacities and 
transfer rates than do Exabyte's products, particularly Quantum's DLT(TM)7000 
half-inch tape drive.  Significant competition is also developing from 
companies offering erasable and non-erasable optical disks.  In addition, other 
companies may introduce in the future competitive storage tape drives based on 
new technologies that may render the Company's products obsolete or 
non-competitive.

Product and Quality Performance
-------------------------------

Any failure of the Company's products, including media, to perform in 
accordance with specifications could result in the loss of critical user data.
Such a loss may result in claims against the Company for damages arising from 
such data loss.  In addition, the Company may incur costs associated with a 
product recall or other corrective action to address product defects, including 
latent or epidemic defects.  The Company's results of operations could be 
materially adversely affected by the costs related to such corrective action or 
the defense of claims and the payment of any judgment or settlement in excess 
of any insurance coverage.  While the Company has in the past incurred certain 
costs related to product defects, no such costs to date have resulted in a 
material adverse effect to the Company's results of operations.

Year 2000
---------

The phenomenon, known generally as the Year 2000 problem, involving the 
potential inability of information or other data-dependent systems to properly 
distinguish year references as of the turn of the century, represents a 
material risk to the Company in a number of ways.

First, the Company itself is heavily dependent upon the proper functioning of 
its own computer or data-dependent systems, including, but not limited to, its 
orders entry, payroll, engineering changes and manufacturing systems.  Any 
failure or malfunctioning on the part of these or other systems could adversely 
affect the Company in ways that are not currently known, discernable, 
quantifiable or otherwise anticipated by the Company.  In mid-1997, Exabyte 
formed a task force to evaluate those areas of the Company that may be affected 
by the Year 2000 problem and devised a plan for the Company to become Year 2000 
compliant in a timely manner.  The task force established a plan designed to 
upgrade all of the Company's major information systems and supporting software 
programs for Year 2000 compliance by the end of 1998.  There can be no 
assurance that any such plan will be successful, that the Company will be able 
to upgrade any or all of its major systems in accordance with the plan or, once 
upgraded, that the systems will be Year 2000 compliant. Should the Company fail 

<PAGE> 19
to upgrade its information systems in a timely manner, the Company could face 
potential problems with the manufacture of its products, which could cause a 
material adverse effect on the Company's results of operations. 

Second, the Company's suppliers, particularly sole-source and long lead-time 
suppliers, may be adversely affected by their respective failure to address the 
Year 2000 problem. Should any of the Company's suppliers encounter Year 2000 
problems that cause the company to delay manufacturing or shipments of key 
components to Exabyte, the Company may be forced to delay or cancel shipments 
of its products, which would have a material adverse effect on the Company's 
results of operations.  The Company has to date undertaken no assessment of any 
of its suppliers' efforts to become Year 2000 compliant.

Third, the Company's customers may be adversely affected by their respective 
failure to address the Year 2000 problem.  Any inability of Exabyte's key 
customers to become Year 2000 compliant which would cause them to delay or 
cancel substantial purchase orders or delivery of Exabyte's products would have 
a material adverse effect on the Company's results of operations.  The Company 
has to date undertaken no assessment of any of its key customers' efforts to 
become Year 2000 compliant.

Fourth, the Company's products are typically integrated into information 
systems which may be date sensitive.  Exabyte's products rely on such systems 
in order to function properly.  Should these systems or supporting software not 
function properly due to the Year 2000 problem, there can be no assurance that 
the Company's products would function properly.  Any failure of the Company's 
products to perform in accordance with specifications could result in the loss 
of critical user data.  Such a loss may result in claims against the Company 
for damages arising from such data loss.  See "RISK FACTORS--Product and 
Quality Performance".

The Company believes that many companies in the high technology industry will 
face significant litigation in the future regarding problems caused by 
Year 2000 noncompliance.  Because the Company operates in the high technology 
industry, it is the Company's belief that it may be the subject of such 
litigation.  Any such litigation could have a material adverse effect on the 
Company's results of operations.

Management of Business and Product Transitions
----------------------------------------------

The Company is currently experiencing a period of rapid business and product 
transition associated in part with its decision to restructure the Company into
divisions, close the Eagle(RTM) division and exit the low-end server and 
desktop markets as it addresses the complexities of developing, manufacturing 
and servicing multiple products which incorporate several different 
technologies and which are sold through multiple marketing channels.  This 
transition has placed a significant strain on the Company's management, 
operational and financial resources, and may continue to do so in the future.
Effective management of this business transition will require Exabyte to 
continually implement and improve its operational, financial and information 
systems and to expand, train and manage its employee base. 







<PAGE> 20
Inventory Write-downs and Special Charges
-----------------------------------------

The Company may be unable to manage inventory levels to meet changing patterns 
of product demand, product transitions and new product introductions.  Such 
inability may result in the Company incurring a special charge or inventory 
write-down, or establishing a reserve which would have a material adverse 
effect on its results of operations.  In the third quarter of 1995 and the 
third and fourth quarters of 1997, the Company incurred special charges or 
inventory write-downs which have had a material adverse effect on the Company's
results of operations.  There can be no assurance that additional reserves, 
write-downs or write-offs will not be taken in the future and that such actions
will not have a material adverse effect on the Company's results of operations.

Product Development
-------------------

Exabyte participates in an industry that is subject to rapid technological 
change.  The Company believes that its future success will depend on its 
ability to apply and extend its technology and further develop reliable tape 
subsystems and robotic tape libraries with competitive price performance and 
quality characteristics.  Accordingly, Exabyte's ability to compete 
successfully depends on continued enhancements to its existing products and the
timely development of new products that meet the changing needs of users.  The 
Company has experienced delays from time to time meeting internal product 
development schedules.  In the future, the Company may encounter difficulties 
that could delay or prevent future product development.

Exabyte continually assesses its product cycles in terms of product 
introduction and withdrawal.  Any failure by the Company to accurately estimate 
the timing of new product introductions may result in the premature or delayed 
withdrawal of its existing product lines.  The premature withdrawal of an 
existing product line could result in the loss of revenue and earnings 
contribution from that product line.  The delayed withdrawal of an existing 
product line could result in the Company's assumption of excess product 
inventory.  Additionally, the premature or delayed introduction of a product 
could adversely affect the sales or withdrawal timing of an existing product.
Failure to accurately time product introductions and withdrawals could have a 
material adverse effect on the Company's results of operations.

The Company is currently developing a follow-on product to Mammoth.  Any 
inability or delay of the Company to develop and manufacture this product would 
have a significant impact on the sale of the Mammoth tape drive and would have 
a material adverse effect on the Company's results of operations.

Additionally, the Company's inability to maintain cost-effective volume 
production of high-quality products and to introduce announced products would 
have a material adverse effect on the Company's results of operations.

Key Employees
-------------

The development, introduction and success of Exabyte's products depend largely 
on the continued employment of certain key employees.  The loss of key 
employees could delay internal product development schedules, interrupt team 
continuity and subject Exabyte to the risk of losing proprietary information to
competitors or other third parties.


<PAGE> 21
Exabyte has in the past lost key employees to competitors and to other 
companies and may likely lose key employees in the future.  Although Exabyte 
has incentive programs in place which are designed to encourage the continuous 
employment of certain key employees, there can be no assurance that such 
programs will be successful.  Any such loss of key employees could have a 
material adverse effect on the Company's results of operations.

Fluctuations In Quarterly Results
---------------------------------

The Company's results can fluctuate substantially from quarter to quarter for 
various reasons.  For example, the markets served by Exabyte are volatile and 
subject to market shifts, which may or may not be discernible in advance by the 
Company.  The Company's operations have in the past and will in the future 
reflect substantial fluctuations from period to period as a consequence of
industry shifts, price erosion, general economic conditions affecting the 
timing of orders from customers, as well as other factors discussed herein.

Third Party Contract Manufacturing
----------------------------------

The Company has contracts with third parties to manufacture certain products. 
Third party manufacturing of the Company's products may impair the Company's 
ability to establish, maintain or achieve adequate product manufacturing design 
standards or product quality levels. Risks associated with the transfer of 
product manufacturing to third parties are particularly pronounced in the early 
stages of the manufacturing of the product.  A number of the Company's third 
party manufacturing programs involve such early-stage manufacturing.

Third party manufacturing of the Company's products is based in part on 
technology that the Company believes to be proprietary.  Exabyte may license 
this technology to contract manufacturers to enable them to manufacture 
products for the Company.  There can be no assurance that such manufacturers
will abide by any use limitations or confidentiality restrictions in such 
licenses.  In addition, these manufacturers may develop processes related to 
manufacturing the Company's products which they would then own independently or 
jointly with the Company.  Any such action would increase Exabyte's reliance on 
such manufacturers or would require the Company to obtain a license from such 
manufacturers in order to manufacture its products.  There can be no assurance 
that any necessary licenses would be available on terms acceptable to the 
Company, if available at all.

Foreign Sourcing
----------------

Because many of Exabyte's key components and products are currently or may be
manufactured in Japan, Germany, The Netherlands, China or Singapore, the 
Company's results of operations may be materially affected by fluctuations in 
currency exchange rates.  A substantial portion of the Company's products 
incorporate subassemblies and components purchased from Japanese or other 
overseas suppliers in yen or other foreign currencies.  The Company enters into
foreign currency forward contracts to hedge the purchase of certain inventory 
components from Japanese suppliers.  (See Note 1 of Notes to the Consolidated 
Financial Statements.)  Additional contractual arrangements may be made 
subjecting Exabyte to additional foreign exchange rate risks. 




<PAGE> 22
The Company's international involvement is also subject to certain other risks 
common to foreign operations, including government regulation and import 
restrictions.  In particular, an adverse foreign exchange movement of the U.S. 
dollar versus Japanese yen or other currency, or the imposition of import 
restrictions or tariffs by the United States government on products or 
components shipped from Japan or another country could have a material adverse
effect on the Company's results of operations.  Additionally, because Exabyte's
products incorporate components produced overseas, the sale of the Company's 
products to domestic federal or state agencies may be restricted by limitations
imposed by the Buy American Act or the Trade Agreement Act.

Foreign Sales
-------------
 
Direct international sales accounted for approximately 32% of sales in 1997 and
Exabyte currently expects that direct international sales will continue to
represent a significant portion of the Company's revenue. In addition, many of 
the Company's domestic customers ship a significant portion of Exabyte's 
products to their customers overseas.  Currently, a very small percentage of 
sales are denominated in foreign currencies and may be directly affected by 
foreign exchange rate fluctuations.  Changes in the foreign exchange rates may 
also affect the volume of sales denominated in U.S. dollars to overseas 
customers.  The Company's sales are also subject to risks common to export 
activities, including government regulation, tariffs, and import and 
environmental restrictions.  Exabyte's international sales may also be subject 
to export licensing requirements. 

Foreign Operations
------------------

The Company's subsidiaries in The Netherlands, Germany, Japan, Canada and 
Singapore operate under their respective local currencies.  See Note 1 to the 
Company's Consolidated Financial Statements.  As a result, any amounts payable 
to a subsidiary or owed by a subsidiary are subject to the foreign exchange 
rate between the U.S. dollar and the respective local currency, and could have 
a material impact on the Company's results of operations.  In addition, the 
Company's foreign operations are subject to the risks generally applicable to 
the conduct of business in such countries.  

Volatility Of Stock Price
-------------------------

The market price of the Company's common stock has historically been, and is 
expected to continue to be, extremely volatile.  The Company's operating 
results have been below the expectations of investors and market analysts in 
the past, and are likely to be below expectations again in some future period.
A shortfall in analyst or investor expectations of Exabyte's operating results
has had and could again have an immediate and significant impact on the market
price of the Company's common stock.  Other factors could also have an 
immediate and significant impact on the market price of the Company's common 
stock, including without limitation, the Company's disclosure of its assessment
of its business prospects, new product announcements by the Company's 
competitors and general conditions in the computer market.






<PAGE> 23
Anti-Takeover Provisions
------------------------

The Company has taken a number of actions which could have the effect of 
deterring a hostile takeover or delaying or preventing a change in control that
could result in a premium payment to the Company's stockholders for their 
shares or that might otherwise be beneficial to the stockholders.  The Company
has adopted a stockholder rights plan which could cause substantial dilution of
stock to a person who attempts to acquire the Company on terms not approved by
the Board of Directors.  In addition, the Company's Restated Certificate of 
Incorporation and By-laws contain provisions which may delay or prevent a 
change in control.  These provisions include:(i) the classification of the 
Board; (ii) the authority of the Board to issue preferred stock without further
action by the stockholders, with such voting rights and other provisions as 
the Board may determine; (iii) the requirement that actions by stockholders be
taken at a meeting of stockholders and not by written consent; (iv) the 
requirement for advance notice of stockholder proposals and director 
nomination;(v) the provision that only the Board may increase the authorized 
number of directors; and (vi) the requirement that special meetings of 
stockholders may be called only by the Chairman of the Board, President or 
majority of directors.

Effective January 26, 1996, the Compensation Committee approved, and the Board
adopted, a severance compensation program ("Severance Program") under which 
officers and other key employees of the Company would receive certain severance
payments if they are dismissed from Exabyte within one year after certain 
changes in control of the Company occurred.  The Severance Program provides for
a severance payment in varying amounts, not to exceed twelve months of 
compensation, depending upon: (i) the time of any such change in control; and
(ii) the position level of the terminated officer or employee.  The Severance 
Program further allows, in certain circumstances, accelerating the vesting of 
outstanding and unexercised stock options held by the affected officer or 
employee.

Securities Suits
----------------

A large number of companies, directors and officers in the high technology 
industry have been subjected to class action and derivative action suits filed
in federal and state courts.  These suits generally allege that the defendants
failed to adequately disclose certain risks.  The Company's results of 
operations could be materially affected by the legal costs of defending such 
actions, the divergence of management's attention from the Company's business,
and the payment of any judgment or settlement arising out of any such actions 
against the Company in the future.  In 1993, the Company successfully defended 
a series of such class actions at an immaterial cost to the Company and it is 
the Company's belief there are no current or pending actions against the 
Company at this time.











<PAGE> 24
Item 2. 
PROPERTIES.

The Company's corporate offices, research and development, and manufacturing 
facilities are located in Boulder, Colorado, in leased buildings aggregating 
approximately 469,996 square feet.  The lease terms on these facilities expire
on various dates ranging from March 1998 to September 2004.  The Company 
believes that additional space will be available if needed for further 
expansion.  The following chart identifies the location and type of each 
Exabyte property.

                                    LOCATION
                        -------------------------------------
   OFFICE TYPE          DOMESTIC                INTERNATIONAL
   -----------          --------                -------------
   R&D & MFG.           Boulder, CO             Nuremberg, Germany
   PROCUREMENT                                  Tokyo, Japan
   SERVICE              Boulder, CO             Falkirk, Scotland
                                                Mississauga, Ontario, Canada
                                                Artarmon, Australia
                                                Singapore
   SALES & SUPPORT      Boulder, CO             Utrecht, The Netherlands
                        Campbell, CA            Mississauga, Ontario, Canada
                        Mission Viejo, CA       Paris, France
                        Oakbrook, IL            Gwynedd,   United Kingdom
                        Annapolis, MD           Frankfurt, Germany
                        Walpole, MA             Shanghai, China
                        Huntersville, NC        Beijing, China
                        Beaverton, OR           Hong Kong, China
                        Dallas, TX              Singapore
                        Houston, TX             



Item 3. 
LEGAL PROCEEDINGS.

The Company is not currently aware of any material legal 
proceedings against the Company.


Item 4.  
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Inapplicable.














<PAGE> 25
EXECUTIVE OFFICERS OF THE COMPANY
=================================

The executive officers of the Company and their ages as of March 2, 1998 are 
as follows:

William L. Marriner    44     Chairman of the Board
                              President and Chief Executive Officer
Mark W. Canright       46     Senior Vice President,
                              Sales & Customer Support
Stephen F. Smith       48     Vice President, Chief Financial Officer,
                              Corporate Secretary and General Counsel

Mr. William L. Marriner joined the Company in March 1987 as Vice President, 
Finance and Administration and Chief Financial Officer.  He was subsequently 
promoted to Senior Vice President in July 1991 and Executive Vice President in
December 1994 and continued to serve as Chief Financial Officer until January
1997. Mr. Marriner was elected acting President and Chief Executive Officer in 
January 1997, President, Chief Executive Officer and director in July 1997 and 
Chairman of the Board in January 1998.  Prior to joining the Company, 
Mr. Marriner held various positions at Storage Technology Corporation from 1978 
to 1987, including Vice President of Pacific and Latin American Operations, 
Manager of Business Planning and Administration for International Operations 
and Assistant to the President.

Mr. Mark W. Canright joined Exabyte in 1987 as Western Region Sales Manager and
was promoted to Western Region Director in 1990, Vice President of North 
American Sales in January 1992, Vice President of Worldwide Sales and Support 
in July 1992, Vice President of Worldwide Sales and Marketing in January 1993 
and Senior Vice President of Worldwide Sales and Marketing in January 1994.  
Mr. Canright has held the position of Senior Vice President of Sales and 
Customer Support since February 1996.  Prior to joining the Company, 
Mr. Canright held various sales management positions at the Burroughs 
Corporation, Data General and Convergent Technologies.

Mr. Stephen F. Smith joined the Company in June 1989 as Exabyte's General 
Counsel, and currently holds this position.  Mr. Smith was appointed as Vice 
President and Chief Financial Officer in December 1997.  Mr. Smith has also 
served as Secretary since February 1995.  Prior to joining Exabyte, Mr. Smith 
held various positions at StorageTek from 1977 to 1989, including General 
Counsel, Senior Counsel and Director of International Financial Operations.

Executive officers serve at the discretion of the Board.  There are no family 
relationships among any of the directors and officers.















<PAGE> 26
PART II

Item 5.
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

The Company's common stock is traded in the over-the-counter market and quoted
in the National Market System of the Nasdaq Stock Market("Nasdaq") under the 
symbol EXBT.  The following table shows, for the calendar quarters indicated, 
the high and low trading prices of the Company's common stock as reported on 
Nasdaq.

<TABLE>
<CAPTION>
Calendar Year                                      High               Low
-------------                                     -----              -----
<S>                                                <C>               <C>
1996
First Quarter................................      $17               $13
Second Quarter...............................       22-3/4            12-3/8
Third Quarter................................       15-1/2            11-5/8
Fourth Quarter...............................       17-1/2            12-5/8

1997
First Quarter................................      $14-3/4           $ 9-1/2
Second Quarter...............................       16-1/2            11-3/4
Third Quarter................................       14-1/8            10
Fourth Quarter...............................       11-15/16           5-5/8

1998
First Quarter (through March 2, 1998)........      $ 8-3/8           $ 6-7/16                       
</TABLE>

At March 2, 1998, the Company had 719 holders of record of its common stock.
The Company has never paid cash dividends on its common stock.  In addition,
the Company's bank line of credit prohibits the payment of dividends without 
prior bank approval.  **The Company presently intends to retain any earnings 
for use in its business and does not anticipate paying any cash dividends on 
its common stock in the foreseeable future.**

Item 6.
SELECTED FINANCIAL DATA
(In thousands, except per share amounts)

The selected financial data set forth below with respect to the Company's 
consolidated statements of operations for the fiscal years ended January 3, 
1998, December 28, 1996, December 30, 1995, December 31, 1994 and January 1,
1994, and with respect to the consolidated balance sheets as of January 3, 
1998, December 28, 1996, December 30, 1995, December 31, 1994 and January 1, 
1994 are derived from consolidated financial statements audited by Price 
Waterhouse LLP, independent accountants.  The consolidated financial statements
for the years ended January 3, 1998, December 28, 1996 and December 30, 1995 
are included elsewhere in this report on Form 10-K and the selected financial 
data shown below are qualified by reference to such financial statements.






<PAGE> 27
<TABLE>
<CAPTION>
 (In thousands except per share amounts)                                Fiscal Years Ended
                                                       Jan. 3,     Dec. 28,    Dec. 30,    Dec. 31,    Jan. 1, 
Consolidated Statement of Operations Data:              1998         1996        1995        1994       1994   
------------------------------------------             -------     -------     -------     -------     -------
<S>                                                   <C>         <C>         <C>         <C>         <C>  
Net sales....................................         $335,684    $362,891    $374,147    $381,844    $310,295 
Cost of goods sold...........................          288,053     265,002     311,891     257,365     219,053 
                                                      --------    --------    --------    --------    --------
Gross profit.................................           47,631      97,889      62,256     124,479      91,242     
Operating expenses:      
     Selling, general and administrative.....           59,211      47,929      49,896      42,560      37,169      
     Research and development................           40,909      38,391      36,956      33,586      31,648      
     Purchased research and development(1)...               --          --          --       2,597          --
                                                      --------    --------    --------    --------    --------
Income (loss) from operations................          (52,489)     11,569     (24,596)     45,736      22,425      
Other income (expense), net..................             (634)      1,114       1,568       2,069       1,507      
                                                      --------    --------    --------    --------    --------
Income (loss) before income taxes(2).........          (53,123)     12,683     (23,028)     47,805      23,932      
(Provision) benefit for income taxes.........           22,312      (4,058)     10,593     (15,400)     (7,750)    
                                                      --------    --------    --------    --------    -------- 
Net income (loss)............................         $(30,811)   $  8,625    $(12,435)   $ 32,405    $ 16,182     
                                                      ========    ========    ========    ========    ========
Basic net income (loss) per share............           $(1.38)      $0.39      $(0.57)      $1.52       $0.77       
                                                      ========    ========    ========    ========    ========
Common shares used in the calculation of 
     basic net income (loss) per share(3)....           22,326      22,003      21,711      21,378      21,001      
                                                      ========    ========    ========    ========    ========
Diluted net income (loss) per share..........           $(1.38)      $0.39      $(0.57)      $1.48       $0.76
Common and potential common shares used               ========    ========	 ========    ========    ========
     in the calculation of diluted net 
     income (loss) per share(3)..............           22,326      22,307      21,711      21,965	 21,399
                                                      ========    ========    ========    ========    ========
Consolidated Balance Sheet Data:
--------------------------------
Working capital..............................         $128,282    $143,730    $137,143    $157,978    $129,693    
Total assets.................................          221,346     256,126     250,336     242,765     197,307     
Long-term obligations, excluding current
     portion.................................            2,974       3,458       4,181         237         454         
Stockholders' equity.........................          170,796     200,013     186,366     196,907     158,535     
</TABLE> 

(1) Purchased research and development relates to the Grundig Data Scanner 
GmbH acquisition during 1994.
(2) The Company recorded restructuring charges in 1997 totaling $34.9 million.
     See Note 10 of Notes to Consolidated Financial Statements.
(3) See Note 1 of Notes to Consolidated Financial Statements for an 
     explanation of the determination of shares used in computing net income 
     (loss) per share.
 
 Quarterly Results of Operations (Unaudited)
-------------------------------------------
The following table sets forth unaudited operating results for each quarter of
fiscal 1997 and 1996.  This information has been prepared on the same basis as
the audited financial statements and, in the opinion of management, contains 
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair statement thereof.  The operating results for any quarter are not 
necessarily indicative of results for any future period. 
<PAGE> 28
<TABLE>
<CAPTION>
(In thousands, except per share amounts)                            Quarters Ended
                                                      Jan. 3,    Sep. 27,   Jun. 28,    Mar. 29,   
                                                       1998        1997       1997        1997 
                                                      -------    -------    -------     -------
<S>                                                   <C>         <C>        <C>        <C>       
Net sales..............................               $74,641     $78,474    $97,144    $85,425
Cost of goods sold.....................                74,771      79,643     71,452     62,187
                                                      -------     -------    -------    ------- 
Gross profit (loss)....................                  (130)     (1,169)    25,692     23,238

Selling, general and administrative....                15,778      15,612     15,083     12,738
Research and development...............                12,207      10,463      8,894      9,345
                                                      -------     -------    -------    -------
Income (loss) from operations(1).......               (28,115)    (27,244)     1,715      1,155    
Other income (expense), net............                  (943)         38       (171)       442
                                                      -------     -------    -------    -------    
Income (loss) before income taxes......               (29,058)    (27,206)     1,544      1,597
(Provision) benefit for income taxes...                11,466      11,914       (525)      (543)
                                                      -------     -------    -------    -------    
Net income (loss)......................              $(17,592)   $(15,292)   $ 1,019    $ 1,054
                                                     ========    ========    =======    =======    
Basic net income (loss) per share......                $(0.79)     $(0.68)     $0.05      $0.05
                                                     ========    ========    =======    =======
Diluted net income (loss) per share....                $(0.79)     $(0.68)     $0.05      $0.05   
                                                     ========    ========    =======    =======
</TABLE>
<TABLE>
<CAPTION>
                                                             As a Percentage of Net Sales
<S>                                                   <C>         <C>        <C>        <C>
Net sales..............................               100.0%      100.0%     100.0%     100.0%
Cost of goods sold.....................               100.2       101.5       73.6       72.8
                                                      -----       -----      -----      -----  
Gross margin...........................                (0.2)       (1.5)      26.4       27.2

Selling, general and administrative....                21.1        19.9       15.5       14.9
Research and development...............                16.4        13.3        9.1       10.9
                                                      -----       -----      -----      ----- 
Income (loss) from operations(1).......               (37.7)      (34.7)       1.8        1.4   
Other income (expense), net............                (1.3)        0.0       (0.2)       0.5
                                                      -----       -----      -----      -----     
Income (loss) before income taxes......               (39.0)      (34.7)       1.6        1.9    
(Provision) benefit for income taxes...                15.4        15.2       (0.6)      (0.7)    
                                                      -----       -----      -----      -----    
Net income (loss)......................               (23.6)%     (19.5)%      1.0%       1.2%    
                                                      =====       =====      =====      =====     
</TABLE>

(1) In the quarters ended January 3, 1998 and September 27, 1997 the Company
recorded pre-tax restructuring charges of $15.5 million and $19.4 million,
respectively, related to its decision to exit the desktop and low-end server
market.  See Note 10 of Notes to Consolidated Financial Statements.  





<PAGE> 29
<TABLE>
<CAPTION>
                                                                     Quarters Ended 
                                                       Dec. 28,   Sep. 28,    Jun. 29,   Mar. 30,    
                                                         1996       1996        1996       1996 
                                                       -------    -------     -------    -------
                                                      (In thousands, except per share amounts)
<S>                                                    <C>        <C>        <C>        <C>       
Net sales..............................                $85,868    $92,741    $90,464    $93,818
Cost of goods sold.....................                 65,005     66,079     65,641     68,277
                                                        ------     ------     ------     ------ 
Gross profit...........................                 20,863     26,662     24,823     25,541

Selling, general and administrative....                 13,865     11,921     11,634     10,509
Research and development...............                 10,972      9,248      8,142     10,029
                                                        ------     ------     ------     ------
Income (loss)  from operations.........                 (3,974)     5,493      5,047      5,003    
Other income (expense), net............                    (11)       293        688        144
                                                        ------     ------    -------     ------    
Income (loss) before income taxes......                 (3,985)     5,786      5,735      5,147    
(Provision) benefit for income taxes...                  1,943     (2,083)    (2,065)    (1,853)   
                                                        ------     ------     ------     ------    
Net income (loss)......................                $(2,042)   $ 3,703    $ 3,670    $ 3,294    
                                                       =======    =======    =======    =======    
Basic net income (loss) per share......                 $(0.09)     $0.17      $0.17      $0.15
                                                       =======    =======    =======    =======
Diluted net income (loss) per share....                 $(0.09)     $0.17      $0.16      $0.15
                                                       =======    =======    =======    =======
    

</TABLE>
<TABLE>
<CAPTION>
                                                             As a Percentage of Net Sales
<S>                                                     <C>        <C>        <C>        <C>
Net sales..............................                 100.0%     100.0%     100.0%     100.0%
Cost of goods sold.....................                  75.7       71.3       72.6       72.8
                                                        -----      -----      -----      ----- 
Gross margin...........................                  24.3       28.7       27.4       27.2

Selling, general and administrative....                  16.1       12.8       12.8       11.2
Research and development...............                  12.8       10.0        9.0       10.7
                                                        -----      -----      -----      -----
Income (loss) from operations..........                  (4.6)       5.9        5.6        5.3   
Other income (expense), net............                    --        0.3        0.8        0.2
                                                        -----      -----      -----      -----    
Income (loss) before income taxes......                  (4.6)       6.2        6.4        5.5   
(Provision) benefit for income taxes...                   2.3       (2.2)      (2.3)      (2.0)   
                                                        -----      -----      -----      -----    
Net income (loss)......................                  (2.3)%      4.0%       4.1%       3.5%    
                                                        =====      =====      =====      =====    
</TABLE>







<PAGE> 30
Item 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS.

The following tables set forth items in the Exabyte Corporation and 
Subsidiaries (the "Company") Consolidated Statements of Operations for the 
three years ended January 3, 1998, December 28, 1996 and December 30, 1995 as a
percentage of net sales.

CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                   Fiscal  Years
                                                     1997              1996              1995
                                                     -----             -----             -----
<S>                                                  <C>               <C>               <C>
Net sales...................................         100.0%            100.0%            100.0%
Cost of goods sold..........................          85.8              73.0              83.4 
                                                     -----             -----             ----- 
Gross margin................................          14.2              27.0              16.6

Operating expenses:
  Selling, general and administrative.......          17.6              13.2              13.3
  Research and development..................          12.2              10.6               9.8
                                                     -----             -----             -----
Income (loss) from operations...............         (15.6)              3.2              (6.5)
Other income (expense), net.................          (0.2)              0.3               0.4
                                                     -----             -----             -----
Income (loss) before income taxes...........         (15.8)              3.5              (6.1)
(Provision) benefit for income taxes........           6.6              (1.1)              2.8
                                                     -----             -----             -----
Net income (loss)...........................          (9.2)%             2.4%             (3.3)%
                                                     =====             =====             =====
</TABLE>

PRODUCT MIX TABLE
<TABLE>
<CAPTION>
                                                                     Fiscal Years
                                                     1997               1996               1995
                                                     -----              -----              -----
<S>                                                  <C>                <C>                <C>
8mm drives:
  EXB-8205, 8505, 8700, Eliant(TM)820,             
  and Mammoth...............................         59.1%              65.3%              59.7%
Libraries:           
  10h, 210, 220, 440, 480 and 18D...........         18.2               14.4               13.9
Media.......................................         14.6               11.9                9.5
Service, spares and other...................          6.6                5.8                5.6
Minicartridge products: 
  TR-3, TR-4i, TR-4s, Eagle(RTM)96, NS8(TM), 
  2501 and Nest(TM) products................          5.8                4.8                1.9
Other end-of-life drives and libraries......          0.8                1.5               12.0
Sales allowances............................         (5.1)              (3.7)              (2.6)
                                                    -----              -----              -----
                                                    100.0%             100.0%             100.0%
                                                    =====              =====              =====
</TABLE>

<PAGE> 31
CUSTOMER MIX TABLE
<TABLE>
<CAPTION>
                                                                     Fiscal Years
                                                     1997               1996               1995
                                                     -----              -----              -----
<S>                                                  <C>                <C>                <C>
OEM.........................................         48.7%              50.6%              54.5%
Reseller....................................         46.1               45.3               41.6
End-user and other..........................          5.2                4.1                3.9
                                                    -----              -----              -----
                                                    100.0%             100.0%             100.0%
                                                    =====              =====              =====
</TABLE>

In addition to the historical information contained herein, the following 
discussion contains forward-looking statements that include risks and 
uncertainties.  The Company has identified by **bold-face** various sentences 
within this discussion which contain such forward-looking statements.  The 
Company's results of operations may differ materially from results contemplated
or otherwise anticipated by each and every such forward-looking statement.
Factors that could cause actual results to differ include, but are not limited 
to, those identified herein as well as those discussed in the Company's filings
on Form 10-K and Forms 10-Q.

FISCAL YEAR 1997 COMPARED TO 1996
---------------------------------

In 1997, the Company's net sales of $335.7 million represented a 7.5% decrease 
from 1996 sales of $362.9 million. In 1997, sales of 8mm products decreased to
$198.5 million from $236.9 million in 1996.  This 16.2% change resulted from
decreased sales of 8mm half-high products, specifically the 8505 and 8205.  
Sales of library products increased in both absolute dollars and as a 
percentage of sales from 14.4% in 1996 to 18.2% in 1997.  Media sales also 
increased in absolute dollars and represented 14.6% of sales in 1997 compared 
to 11.9% of sales in 1996.  Other components of revenues did not vary 
materially either in absolute dollars or as a percentage of sales.
 
The relative customer mix during 1997 shifted slightly to resellers, end-users 
and others from original equipment manufacturers ("OEMs").  

The Company's gross margin percentage for 1997 decreased to 14.2% compared to 
27.0% for 1996.  The 1997 margins were affected by 1997 restructuring charges 
which impacted cost of sales by $29.0 million (see Note 10 of Notes to 
Consolidated Financial Statements).  Excluding such charges, the gross margin 
for 1997 was 22.8%.  Decreased gross margin percentages resulted from the 
impact of (1) start-up manufacturing costs and inefficiencies on several new 
products, (2) lower than expected manufacturing volumes, (3) increasing levels 
of mini-cartridge sales, which were made at lower gross margins, and (4) higher
levels of program expenditures aimed at retailers through the Eagle(RTM) 
division.  These impacts were partially offset by lower warranty costs in 1997 
versus 1996 and the impact of a stronger dollar versus the yen, which reduced 
the cost of certain Japanese components.  **The yen is expected to have a 
continuing positive impact on margins in 1998.  Due to the competitive nature 
of the storage peripherals business, price erosion on most products is expected
to have a commensurate negative impact on gross margins unless manufacturing 
costs can be reduced at the same time.**


<PAGE> 32
Selling, general and administrative expenses increased to $59.2 million in 
1997 from $47.9 million in 1996.  These dollar amounts represent 17.6% and
13.2%, respectively, of revenue in each year.  Excluding 1997 restructuring 
charges (see Note 10 of Notes to Consolidated Financial Statements), these 
expenses were $57.7 million and 17.2% of revenue.  The increase is largely the 
result of increased marketing expenditures on certain of the Company's newer 
products, such as Mammoth and Eliant(TM)820, and a corporate branding awareness 
program.  These expenses were also modestly impacted by the opening of 
subsidiaries in Singapore and Canada during the latter part of 1996 and early 
part of 1997.  

Research and development expenditures increased to $40.9 million in 1997 
compared to $38.4 million in 1996.  These dollar amounts represent 12.2% and
10.6%, respectively, of revenue for each year.  Excluding 1997 restructuring
charges (see Note 10 of Notes to Consolidated Financial Statements), these 
expenses were $37.4 million and 11.1% of revenue.  Recurring research and 
development expenditures were adversely impacted in 1996 by higher than normal
levels of spending in connection with completion of the Mammoth development 
effort.  **The Company expects 1998 research and development expenses to 
decrease from 1997 levels due to the decision to close the Eagle(RTM) division 
and cancel its Eagle(RTM) development projects.** 
 
Other income (expense), net, consists of interest income and expense, state 
franchise taxes, foreign currency translation gains and losses and other 
miscellaneous items.  Other income (expense), net, was impacted in 1997 by the
write-off of an investment, which was considered impaired, of $900,000.

The income tax benefit for 1997 was 42.0% compared to expense of 32.0% in the 
prior year.  The 1997 tax benefit also reflects the benefit of filing amended 
tax returns for 1993-1995 to claim additional research and development tax 
credits.  See Note 6 of Notes to Consolidated Financial Statements for a 
description of the factors which resulted in the effective tax rates being 
different from the statutory tax rate of 35.0%.  **The Company currently 
expects the 1998 effective tax rate to approximate 34.0%.**  

The change from net income of $8.6 million in 1996 to a net loss of $30.8 
million in 1997 resulted from the impacts of lower sales and gross margins in
1997, combined with higher operating expenses and the impact of restructuring
charges related to the decision to close the Eagle(RTM) division and exit the 
desktop and low-end server markets.
 
FISCAL YEAR 1996 COMPARED TO 1995
---------------------------------

The Company's net sales of $362.9 million for fiscal 1996 decreased 3% from net
sales of $374.1 million for 1995.  The overall decrease in sales resulted from 
increases in sales of the Company's 8mm half-high drives, minicartridge drives 
and consumables, which were more than offset by decreased sales of 8mm full-
high and 4mm drives which the Company discontinued in 1995 and 1996, 
respectively.  Sales in 1996 were also impacted by limited supply of the 
Company's newest 8mm drive, Mammoth.

Sales of 8mm half-high drives increased to 65.3% of sales in 1996 from 59.7% in 
1995.  This increase was the result of increased sales of the Company's newer 
8mm half-high products, such as Mammoth, and the transition away from 8mm full-
high products.  Also included in 8mm half-high sales are more mature products, 
such as the 8205 and 8505.  Sales of these products remained relatively stable 
representing 57.8% of sales in 1996 compared to 58.8% in 1995.  Sales of 8mm 
half-high libraries remained stable at 14.4% of total sales in 1996 and 13.9% 
<PAGE> 33
in 1995.  Sales of 8mm full-high drives and libraries represented 0.8% of sales 
in 1996 compared to 6.2% in 1995.  Sales of 4mm products decreased to 0.7% of 
sales in 1996 compared to 5.8% in 1995.

The relative customer mix during 1996 shifted to resellers from OEMs.  Reseller
sales increased to 45.3% of sales in 1996 from 41.6% in 1995.  OEM sales 
decreased to 50.6% of sales in 1996 from 54.5% in 1995.  End-user and other 
sales represented 4.1% of net sales in 1996 and 3.9% in 1995.  

The Company's gross margin percentage for 1996 increased to 27.0% compared to 
16.6% for 1995.  The 1995 margins were affected by special non-recurring third 
quarter charges in cost of sales of $34.2 million related to the write-down of 
full-high inventories pursuant to an end-of-life announcement.  Excluding such 
charges, the gross margin for 1995 was 25.8%.  Gross margin was affected by a 
number of factors during the year.  An increase in the value of the dollar 
versus the yen resulted in reduced costs for certain Japanese components.  
Additionally, improved warranty costs had a positive impact on margins. 

Selling, general and administrative expenses decreased to $47.9 million in 1996
from $49.9 million in 1995.  The decreases are primarily the result of special 
non-recurring charges in 1995 totaling $2.6 million related to the write-off of
goodwill and end-of-life capitalized equipment.  

Research and development expenditures increased to $38.4 million for 1996 
compared to $37.0 million in 1995.  The increases were attributed to continuous 
engineering improvements on products released during the year, such as Mammoth,
as well as increased engineering efforts related to new 8mm, minicartridge and 
library products which were introduced in 1997.

Other income, net, consists primarily of interest income and expense, state 
franchise taxes, foreign currency gains and losses and other miscellaneous 
items.

The provision for income tax for 1996 was 32.0% compared to a benefit of 46.0% 
in the prior year.  See Note 6 of Notes to Consolidated Financial Statements 
for a description of the factors which resulted in the effective tax rates 
being different from the statutory tax rate of 35.0%.  

A net loss of $12.4 million in 1995 changed to net income of $8.6 million in
1996. This change reflects the impact of certain inventory and other 
write-downs in 1995.

RESTRUCTURING CHARGES
---------------------

During 1997, the Company recorded pre-tax restructuring charges of $34.9 
million related to formal decisions by the Company's Board of Directors to exit
the desktop and low-end server market through the closure of its Eagle(RTM) 
division.  These decisions were made in order to focus the Company on mid-range 
application server markets and establish a more competitive cost structure in 
those markets.








<PAGE> 34
The following table summarizes the activity in the Company's restructuring 
reserves during 1997:
<TABLE>
<CAPTION>                                Workforce         Inventory            Asset
(In thousands)                           Reduction        Write-downs        Write-downs         Total
                                         ---------        -----------        -----------         -----
<S>                                      <C>               <C>                <C>                <C>
Restructuring charges...........         $3,123            $24,684            $7,140             $34,947
Asset write-downs...............             --            (16,890)           (6,140)            (23,030)
Cash payments...................         (1,480)              (134)               --              (1,614)
Additional charges/
    reclassifications...........           (196)               128                --                 (68)
                                         ------             ------            ------             -------
Balance, January 3, 1998........         $1,447             $7,788            $1,000             $10,235
                                         ======             ======            ======             =======

</TABLE>

Cash payments in 1997 relate primarily to termination payments for the first of
two reductions in workforce.  A second reduction in force resulted from a 
formal action in December and took place in January 1998.  Additional charges/
reclassifications resulted from the write-off of a note receivable, net 
additional charges impacting earnings of $58,000 and reclassifications among
reserves.  **The majority of remaining reserve balances are expected to result 
in future cash outflows.  The workforce reduction and related recurring expense
reductions are expected to yield annual savings of at least $20 million.**

NEW ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of  
Financial Accounting Standards Nos. 130 and 131, "Reporting Comprehensive
Income" ("SFAS 130") and "Disclosures about Segments of an Enterprise and 
Related Information" ("SFAS 131"), respectively (collectively, the 
"Statements").  The Statements are effective for fiscal years beginning after
December 15, 1997.  SFAS 130 establishes standards for reporting of 
comprehensive income and its components in annual financial statements.  SFAS
131 establishes standards for reporting financial and descriptive information
about an enterprise's operating segments in its annual financial statements and
selected segment information in interim financial reports.  Reclassification or
restatement of comparative financial statements or financial information for 
earlier periods is required upon adoption of SFAS 130 and SFAS 131, 
respectively.  **Application of the Statements' requirements is not expected to
have a material impact on the Company's consolidated financial position, 
results of operations or earnings per share data as currently reported, 
although its disclosures on business segments may change.**

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

During 1997, the Company expended $6.3 million of cash for operating 
activities, received $1.3 million from the issuance of common stock to Company
employees, expended $11.8 million for capital equipment and paid $1.5 million 
on long-term liabilities.  Together, these activities resulted in a decrease in
the combined balance of cash and short-term investments of $18.3 million to a 
year-ending balance of $48.5 million.  The Company's working capital decreased 
to $128.3 million on January 3, 1998 from $143.7 million on December 28, 1996.



<PAGE> 35
The Company has a $7.5 million bank line of credit which expires May 15, 1998, 
with borrowings under the line limited to 80% of eligible accounts receivable 
plus 25% of eligible inventory (limited to $3,000,000).  On January 3, 1998, 
the amount available under the line was $7.5 million and no borrowings were 
outstanding.  Borrowings under the line of credit bear interest at the lower of
the bank's prime rate or LIBOR + 2%.  The ability to borrow under this line of 
credit is dependent upon the Company's adherence to a set of financial 
covenants.  The Company was in technical violation of certain of these 
covenants at the end of the fourth quarter.  This violation was subsequently 
waived by the lender.  **The Company anticipates that it will renew this line 
at comparable terms upon its expiration.**  Offsetting the amount available 
under the line of credit is a letter of credit which secures certain leasehold 
improvements made by the Company's subsidiary in Germany.  This letter is for 
DM 1,300,000 and decreases by DM 100,000 in August of each year until it is 
fully depleted.

**The Company currently expects to make capital expenditures of approximately 
$11.1 million during 1998.  The Company believes its existing sources of 
liquidity and funds expected to be generated from operations will provide 
adequate cash to fund anticipated working capital and other cash requirements 
through fiscal 1998.**


Item 8.                                             
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                         Page

Report of Independent Accountants...................................      36



Consolidated Balance Sheets - 
January 3, 1998 and December 28, 1996...............................      37


Consolidated Statements of Operations - for the years ended
January 3, 1998, December 28, 1996 and December 30, 1995............      38


Consolidated Statements of Changes in Stockholders' Equity -
for the years ended January 3, 1998, December 28, 1996 and 
December 30, 1995...................................................      39


Consolidated Statements of Cash Flows -
for the years ended
January 3, 1998, December 28, 1996 and December 30, 1995............      40-41


Notes to Consolidated Financial Statements..........................      42-56








<PAGE> 36
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and 
   Stockholders of Exabyte Corporation

In our opinion, the accompanying consolidated balance sheets and the related 
consolidated statements of operations, of changes in stockholders' equity and 
of cash flows present fairly, in all material respects, the financial position 
of Exabyte Corporation and its subsidiaries at January 3, 1998 and December 28,
1996, and the results of their operations and their cash flows for each of the 
three years in the period ended January 3, 1998, in conformity with generally 
accepted accounting principles.  These financial statements are the 
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our 
audits of these statements in accordance with generally accepted auditing 
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material 
misstatement.  An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements, assessing 
the accounting principles used and significant estimates made by management, 
and evaluating the overall financial statement presentation.  We believe that 
our audits provide a reasonable basis for the opinion expressed above.




/s/ Price Waterhouse LLP
------------------------
PRICE WATERHOUSE LLP


Boulder, Colorado
January 21, 1998


























<PAGE> 37
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands)
<TABLE>
<CAPTION>
                                            January 3,               December 28,
                                              1998                      1996
                                            ---------                 ---------
<S>                                         <C>                       <C>
ASSETS
Current assets:
  Cash and cash equivalents..........       $ 47,014                  $ 46,223 
  Short-term investments.............          1,470                    20,600
  Accounts receivable, net...........         41,577                    56,414
  Inventories, net...................         44,551                    55,765
  Income tax receivable..............         15,873                        --
  Deferred income taxes..............         20,678                    14,172
  Other current assets...............          4,695                     3,211
                                            --------                  --------
Total current assets.................        175,858                   196,385
                                            --------                  --------
Property and equipment, net..........         35,152                    45,187
Deferred income taxes................          8,900                    10,055
Other assets.........................          1,436                     4,499
                                            --------                  --------   
                                              45,488                    59,741
                                            --------                  --------   
                                            $221,346                  $256,126
                                            ========                  ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable...................       $ 13,992                  $ 18,916
  Accrued liabilities................         32,021                    31,900
  Accrued income taxes...............          1,044                     1,007
  Current portion of long-term 
    obligations .....................            519                       832
                                            --------                  -------- 
Total current liabilities............         47,576                    52,655
Long-term obligations ...............          2,974                     3,458
                                            --------                  --------
Commitments (Note 7).................
Stockholders' equity:
  Preferred stock, $.001 par value;
    14,000 shares authorized; no
    shares issued and outstanding....             --                        --  
  Common stock, $.001 par value;
    50,000 shares authorized; 
    22,466 and 22,184 shares
    issued...........................             22                        22
  Capital in excess of par value.....         65,718                    64,124
  Treasury stock, at cost, 15 shares.             (9)                       (9)
  Retained earnings..................        105,065                   135,876
                                            --------                  --------
Total stockholders' equity...........        170,796                   200,013
                                            --------                  --------
                                            $221,346                  $256,126
                                            ========                  ========
</TABLE>
     The accompanying notes are an integral part of the consolidated financial 
     statements.
<PAGE> 38
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                             Fiscal Years Ended
                                                  January 3,     December 28,    December 30,
                                                    1998            1996            1995  
                                                  --------        --------        --------
<S>                                               <C>             <C>             <C>
Net sales............................             $335,684        $362,891        $374,147
Cost of goods sold...................              288,053         265,002         311,891
                                                  --------        --------        --------
Gross profit.........................               47,631          97,889          62,256

Operating expenses:
Selling, general and administrative..               59,211          47,929          49,896
Research and development.............               40,909          38,391          36,956
                                                  --------        --------        --------
Income (loss) from operations........              (52,489)         11,569         (24,596)

Other income (expense), net..........                 (634)          1,114           1,568
                                                  --------        --------        --------
Income (loss) before income taxes....              (53,123)         12,683         (23,028)

(Provision) benefit for income taxes.               22,312          (4,058)         10,593
                                                  --------        --------        --------
Net income (loss)....................             $(30,811)       $  8,625        $(12,435)
                                                  ========        ========        ========
Basic net income (loss) per share....               $(1.38)          $0.39          $(0.57)
                                                  ========        ========        ========
Common shares used in the 
calculation of basic net income
(loss) per share.....................               22,326          22,003          21,711
                                                  ========        ========        ======== 

Diluted net income (loss) per share..               $(1.38)          $0.39          $(0.57)
                                                  ========        ========        ========
Common and potential common shares
used in the calculation of diluted
net income (loss) per share..........               22,326          22,307          21,711
                                                  ========        ========        ========

</TABLE>

     The accompanying notes are an integral part of the consolidated financial 
     statements.












<PAGE> 39
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                               Common Stock     Treasury Stock    Capital in Excess    Retained
                                              Shares  Amount   Shares    Amount      of Par Value      Earnings
                                              ------  ------   ------    ------    ---------------     --------
<S>                                           <C>        <C>      <C>     <C>         <C>              <C>   
Balance, December 31, 1994 ............       21,657     $22      (15)    $(9)        $57,208          $139,686

Common stock options exercised ($.10
  to $18.38 per share).................           85                                      825
Common stock issued pursuant to the
  Employee Stock Purchase Plan
  ($11.69 and $11.63 per share)........           85                                      987
Tax effect of disqualifying 
  dispositions of common stock.........                                                    82
Net loss for the year..................                                                                 (12,435)
                                              ------    ----     ----    ----         -------          --------
Balance, December 30, 1995 ............       21,827      22      (15)     (9)         59,102           127,251

Common stock options exercised ($.10
  to $20.63 per share).................          257                                    3,347
Common stock issued pursuant to the
  Employee Stock Purchase Plan 
  ($10.94 and $11.10 per share)........          100                                    1,097
Tax effect of disqualifying 
  dispositions of common stock.........                                                   578
Net income for the year................                                                                   8,625
                                              ------    ----     ----    ----         -------          --------
Balance, December 28, 1996.............       22,184      22      (15)     (9)         64,124           135,876

Common stock options exercised ($.10
  to $15.13 per share).................          143                                      236
Common stock issued pursuant to the
  Employee Stock Purchase Plan
  ($5.47 and $10.89 per share).........          139                                    1,075
Tax effect of disqualifying 
  dispositions of common stock.........                                                   164
Stock compensation expense.............                                                   119
Net loss for the year..................                                                                 (30,811)
                                              ------    ----     ----    ----         -------          --------
Balance, January 3, 1998...............       22,466     $22      (15)    $(9)        $65,718          $105,065
                                              ======    ====     ====    ====         =======          ========

</TABLE>
                        
     The accompanying notes are an integral part of the consolidated financial 
     statements.









<PAGE> 40
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
                                                                Fiscal Years Ended	
                                                    -----------------------------------------
                                                     January 3,    December 28,   December 30,
                                                       1998           1996           1995
                                                    -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>
 
Cash flows from operating activities:
     Cash received from customers............        $350,833       $363,804       $382,862
     Cash paid to suppliers and employees....        (359,975)      (354,209)      (367,875)
     Interest received.......................           2,216          2,759          3,251
     Interest paid...........................            (637)          (529)          (330)
     Income taxes paid.......................          (1,732)        (2,476)        (7,292)
     Income tax refund received..............           3,020          4,160             --
          Net cash provided (used) by                --------       --------       --------
            operating activities.............          (6,275)        13,509         10,616
                                                     --------       --------       --------

Cash flows from investing activities:
     Sale of short-term investments, net.....          19,130          8,200          5,311
     Capital expenditures....................         (11,810)       (19,276)       (23,365)
     Cash provided (used) by investing               --------       --------       -------- 
       activities............................           7,320        (11,076)       (18,054)
                                                     --------       --------       --------
Cash flows from financing activities:
     Net proceeds from issuance of 
       common stock .........................           1,311          4,444          1,812
     Principal payments on long-term
       obligations...........................          (1,565)          (791)          (470)
          Net cash provided (used) by                --------       --------       --------
            financing activities.............            (254)         3,653          1,342
                                                     --------       --------       --------

Net increase (decrease) in cash and cash 
     equivalents.............................             791          6,086         (6,096)
Cash and cash equivalents at beginning 
     of year.................................          46,223         40,137         46,233
                                                     --------       --------       --------
Cash and cash equivalents at end 
     of year.................................         $47,014        $46,223        $40,137
                                                     ========       ========       ========
</TABLE>

     The accompanying notes are an integral part of the consolidated financial 
     statements.









<PAGE> 41
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
                                                                   Fiscal Years Ended	
                                                       -----------------------------------------
                                                        January 3,    December 28,   December 30,
                                                          1998           1996           1995   
                                                       -----------    -----------    ----------- 
<S>                                                     <C>            <C>            <C>
Reconciliation of net income (loss) to net
  cash provided (used) by operating activities:
     Net income (loss)............................      $(30,811)      $  8,625       $(12,435)
     Adjustments to reconcile net income (loss)
       to net cash provided by operating
       activities:
          Depreciation, amortization               
            and other.............................        19,742         17,059         17,153
          Write-down of assets....................         6,054             --            792
          Deferred income tax provision 
            (benefit).............................        (5,351)         1,071        (12,262)
          Provision for losses and reserves
            on accounts receivable................        14,486         11,159          8,723
          Provision for inventory write-downs.....        15,236             --         31,188
          Stock compensation expense..............           119             --             --

     Change in assets and liabilities:
          Accounts receivable.....................           351        (10,788)          (569)
          Inventories.............................        (4,022)       (11,596)       (28,752)
          Income tax receivable...................       (15,873)            --             --
          Other current assets....................        (1,484)         6,235         (6,695)
          Other assets............................          (171)        (1,770)          (845)
          Accounts payable........................        (4,923)        (2,924)         1,382
          Accrued liabilities.....................           120         (1,045)        11,600         
          Accrued income taxes....................           201         (2,517)         1,336
          Other long-term obligations.............            51             --             --           
                                                         -------        -------        -------
          Net cash provided (used) by
            operating activities..................       $(6,275)       $13,509        $10,616       
                                                         =======        =======        =======

Supplemental schedule of non-cash
  investing and financing activities:
     Note payable issued to purchase software
       licenses...................................       $   626          $  --        $ 1,055            
     Income tax benefit of disqualifying 
       dispositions of common stock...............           164            578             82 
     Capital lease obligations....................           137             --          4,042            
     Transfer of inventories to
       property and equipment.....................            --             --          2,605            
     
    
     
</TABLE>

     The accompanying notes are an integral part of the consolidated financial 
     statements.

<PAGE> 42
EXABYTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Exabyte Corporation (the "Company") was incorporated on June 5, 1985 under the 
laws of the state of Delaware.  The Company engages in the design, development,
manufacture and marketing of computer magnetic tape subsystems for general 
commercial application throughout the world.  The Company reports its results 
of operations on the basis of a fiscal year of 52 or 53 weeks ending on the 
Saturday closest to December 31.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and 
its wholly owned subsidiaries. All intercompany accounts and transactions have 
been eliminated.

Foreign Currency Translation

The U.S. dollar is the functional currency of the consolidated corporation.  
For the Company's foreign subsidiaries, monetary assets and liabilities are 
translated into U.S. dollars using the exchange rates in effect at the balance 
sheet date and non-monetary assets are translated at historical rates.  Results
of operations are translated using the average exchange rates during the 
period.  Foreign exchange gains and losses included in the consolidated 
statements of operations were not material in any year presented.

Foreign Currency Forward Contracts

The Company enters into foreign currency forward contracts in anticipation of 
movements in the dollar/yen exchange rate which it uses to hedge the purchase 
of certain inventory components from Japanese manufacturers.  The Company does 
not enter into these contracts for trading purposes.  The Company had 
outstanding contracts totaling $16,663,000 and $22,325,000 at January 3, 1998 
and December 28, 1996, respectively.  The maturity dates for these contracts 
for both years were within six months of the Company's respective year end. 
Hedged inventory transactions are included in the Statement of Cash Flows as 
operating activities.  At January 3, 1998, and December 28, 1996, the Company 
had unrealized losses on forward contracts of approximately $1,185,000 and 
$1,146,000 based on the dollar/yen spot rate on that date.  Transaction gains 
or losses due to exchange rate movements are recorded upon settlement of the 
transaction, deferred into inventory, and recognized in income as the 
underlying inventory is sold.

Revenue Recognition

Sales are recognized upon shipment of products to customers.  Revenue from 
sales to certain resellers is subject to agreements allowing certain rights of
return and price protection on unsold merchandise held by those resellers.
Accordingly, reserves for estimated future returns and for price protection are
provided in the period of the sale.







<PAGE> 43
Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, short-term investments, 
accounts receivable, accounts payable, accrued liabilities and the current 
portion of long-term obligations in the consolidated financial statements 
approximate fair value because of the short-term maturity of these instruments.
The fair value of long-term obligations under notes payable was estimated by
discounting the future cash flows using market interest rates and does not 
differ significantly from that reflected in the consolidated financial 
statements.

Concentration of Credit Risk

The Company's customers include original equipment manufacturers ("OEMs"), 
resellers and end-users.  Financial instruments which potentially subject the
Company to concentrations of credit risk are primarily accounts receivable, 
cash equivalents and short-term investments.  The Company performs ongoing 
credit evaluations of its customers' financial condition and, generally, 
requires no collateral from its customers.  Accounts receivable are summarized
as follows:

<TABLE>
<CAPTION>
                                                      January 3,    December 28,
                                                        1998           1996
                                                     -----------    -----------
                                                          (In thousands)
<S>                                                   <C>             <C>
Accounts receivable..........................         $49,323         $63,729
Less: reserves and allowance for 
  non-collection.............................          (7,746)         (7,315)
                                                      -------         -------
                                                      $41,577         $56,414
                                                      =======         =======
</TABLE>
During the fiscal years ended January 3, 1998, December 28, 1996 and 
December 30, 1995, one customer accounted for approximately 17%, 15% and 15%,
respectively, of sales.  Another customer accounted for approximately 13%, 11%
and 11% of sales during the same periods. No other customers accounted for 10%
or more of sales in any of the three years presented.

Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments purchased with an original 
maturity of three months or less to be cash equivalents.  Such cash equivalents
aggregated $35,246,000 and $31,817,000 at January 3, 1998 and December 28, 
1996, respectively.

Inventories

Inventories are stated at the lower of cost or market, cost being determined by
the first-in, first-out method and include material, labor and manufacturing 
overhead.  Inventories consist of the following:






<PAGE> 44
<TABLE>
<CAPTION>
                                                     January 3,     December 28,
                                                        1998           1996
                                                     -----------    -----------
                                                           (In thousands)
<S>                                                   <C>             <C>
Raw materials and component parts............         $29,266         $34,865
Work-in-process..............................           2,447           2,692
Finished goods...............................          12,838          18,208
                                                      -------         -------
                                                      $44,551         $55,765
                                                      =======         =======
</TABLE>

During the third quarter of 1995, the Company recorded a lower of cost or 
market write-down on certain end-of-life products aggregating $23,636,000.  
At the same time, the Company accrued for losses on purchase commitments of 
$7,552,000 related to such products.  In 1997, the Company incurred 
restructuring charges which included inventory write-downs (see Note 10).

Depreciation and Amortization

Property and equipment are recorded at cost.  Depreciation is computed using  
the straight-line method over the estimated useful lives of the respective 
depreciable assets (two to five years). Leasehold improvements are amortized on 
a straight-line basis over the shorter of the useful life of the asset or the 
lease term.  Maintenance and repairs are expensed as incurred and improvements 
are capitalized.  Goodwill resulting from acquisitions is amortized using the 
straight-line method over five years.  All goodwill was fully amortized prior 
to 1996.  Amortization expense was $440,000 in 1995.  In the third quarter of 
1995, the Company determined that remaining goodwill aggregating $2,273,000 
related to two 1993 acquisitions had been impaired and, accordingly, it was 
written off.

Warranty Costs

A provision for estimated future costs which may be incurred under the 
Company's various product warranties is recorded when products are shipped.

Research and Development Costs

Software development costs for certain projects are capitalized from the time 
technological feasibility is established to the time the resulting software 
product is first shipped.  Capitalized software costs are stated at the lower 
of cost or net realizable value which totaled $440,000 and $2,334,000 at 
January 3, 1998 and December 28, 1996, respectively.  These items are recorded 
as other non-current assets.  Amortization expense related to capitalized 
software development costs was $170,000 in 1997.  There was no amortization in 
prior periods.  In conjunction with the Company's restructuring in 1997,
certain capitalized software development efforts were cancelled and costs 
capitalized through that date were written off (See Note 10).  All other 
research and development costs are expensed as incurred.






<PAGE> 45
Net Income (Loss) Per Share

In 1997, the Company adopted the guidelines of Statement of Financial 
Accounting Standards No. 128 "Earnings per Share."  1996 and 1995 earnings per
share data were restated to reflect the new pronouncement.  Basic net income 
(loss) per common share is based on the weighted-average number of shares of 
common stock outstanding during each respective period.  Diluted net income 
(loss) per common share adds to basic weighted shares the weighted-average 
number of shares of potential common shares (diluted stock options) outstanding 
during each respective period. Proceeds from the exercise of the potential 
common shares are assumed to be used to repurchase outstanding shares of the 
Company's common stock at the average fair market value during the period.  In 
a period in which a loss is incurred, only the weighted-average number of 
common shares is used to compute the diluted loss per share as the inclusion of 
potential common shares would be antidilutive.  The calculation of basic and 
diluted earnings per share (EPS) is as follows:

<TABLE>
<CAPTION>
 In thousands, except per share data

                                       1997          1996          1995
                                       ----          ----          ----
<S>                                    <C>           <C>           <C>
Basic EPS computation:
    Net income (loss)............      $(30,811)     $8,625        $(12,435)
                                       ========      ======        ========
    Common shares outstanding....        22,326      22,003          21,711
                                       ========      ======        ========
Basic EPS........................       $ (1.38)     $ 0.39         $ (0.57)
                                       ========      ======        ======== 
Diluted EPS computation:
    Net income (loss)............      $(30,811)     $8,625        $(12,435)
                                       ========      ======        ========
Shares:
    Common shares outstanding....        22,326      22,003          21,711
    Dilutive stock options.......            --         304              --
                                       --------      ------         ------- 
                                         22,326      22,307          21,711
                                       ========      ======        ========
Diluted EPS......................        $(1.38)     $ 0.39          $(0.57)
                                       ========      ======        ========    
</TABLE>

Options of 3,204,000, 2,317,000, and 2,173,000 were excluded from dilutive
stock option calculations for 1997, 1996 and 1995, respectively, because their
exercise prices were greater than the average fair market value of the 
Company's stock for the period, and as such they would be antidilutive.

In addition, for 1997 and 1995, 494,000 and 975,000 options, respectively, were
excluded from the diluted computation above because of their antidilutive 
effect on net loss per share.  Inclusions of these shares would have resulted
in additional dilutive stock options outstanding of 97,000 and 312,000, 
respectively.

Since January 3, 1998, the Company has issued 1,096,000 stock options which 
could have a dilutive effect on diluted net income per common share.
Additionally, the Company has repurchased 137,000 shares of common stock.

<PAGE> 46
Use of Estimates

The Company has prepared these financial statements in conformity with 
generally accepted accounting principles which require the use of management's 
estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosure of contingent liabilities, as well as the reported 
amounts of revenue and expenses.  Accordingly, actual results could differ from 
the estimates used.

New Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statement of  
Financial Accounting Standards Nos. 130 and 131, "Reporting Comprehensive
Income" ("SFAS 130") and "Disclosures about Segments of an Enterprise and 
Related Information" ("SFAS 131"), respectively (collectively, the 
"Statements").  The Statements are effective for fiscal years beginning after
December 15, 1997.  SFAS 130 establishes standards for reporting of 
comprehensive income and its components in annual financial statements.  SFAS
131 establishes standards for reporting financial and descriptive information
about an enterprise's operating segments in its annual financial statements and
selected segment information in interim financial reports.  Reclassification or
restatement of comparative financial statements or financial information for 
earlier periods is required upon adoption of SFAS 130 and SFAS 131, 
respectively.  Application of the Statements' requirements is not expected to
have a material impact on the Company's consolidated financial position, 
results of operations or earnings per share data as currently reported,
although its disclosures on business segments may change.

NOTE 2--PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

                                                   January 3,     December 28,
                                                     1998             1996
                                                  -----------     -----------
                                                          (In thousands)

Equipment and furniture......................        $90,711         $84,263
Assets under capital leases..................          5,222           5,825
Leasehold improvements.......................         17,586          17,334
Less: accumulated depreciation and
  amortization...............................        (78,367)        (62,235)
                                                     -------         -------
                                                     $35,152         $45,187
                                                     =======         =======


Depreciation expense was $19,503,000, $17,058,000 and $14,443,000 in 1997, 1996
and 1995, respectively.  Amortization of equipment and furniture under capital 
leases is included in depreciation expense.  In 1997, the Company incurred 
restructuring charges which included fixed asset write-downs (see Note 10 of
Notes to Consolidated Financial Statements).







<PAGE> 47
NOTE 3--ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                                    January 3,    December 28,
                                                       1998           1996
                                                   -----------    -----------
                                                          (In thousands)

Wages and employee benefits..................         $ 7,943        $ 8,494
Warranty and related costs...................          11,445         18,373
Purchase commitments.........................           4,528             82
Other........................................           8,105          4,951
                                                      -------        -------
                                                      $32,021        $31,900
                                                      =======        =======

NOTE 4--DEBT

Line of Credit

As of January 3, 1998, the Company maintained a $7,500,000 unsecured line of
credit.  No borrowings were outstanding under the line as of that date.  Under
the terms of the agreement, the Company may borrow the lesser of $7,500,000 or
80% of eligible accounts receivable plus 25% of eligible inventories (limited 
to $3,000,000).  Borrowings made under the agreement bear interest at the lower
of the bank's prime rate or LIBOR + 2%.  The Company's bank line of credit 
prohibits the payment of dividends without prior bank approval.  The line of 
credit agreement also includes certain financial and other covenants. At 
January 3, 1998, the Company was in technical violation of certain of these
covenants;  these violations were subsequently waived by the lender.  The 
agreement is currently scheduled to expire in May 1998.  

Offsetting the amount available under the line of credit is a letter of credit
which secures certain leasehold improvements made by the Company's subsidiary 
in Germany.  This letter is for DM 1,300,000 and decreases by DM 100,000 in 
August of each year until it is fully depleted.

Long-Term Obligations

In 1995, the Company entered into a note payable for $1,055,000 to purchase 
certain software licenses.  The note payable requires quarterly installments of
interest (7.5%) and principal through February 1998.  The note was paid off in 
January 1998.  The Company has also entered into capital lease obligations 
related to the acquisition of certain equipment and leasehold improvements.  
The following represents future payments pursuant to these obligations as of 
January 3, 1998:












<PAGE> 48
<TABLE>
<CAPTION>
                                                      Capital Lease
                                      Note Payable     Obligations      Total
                                      ------------    -------------     -----
                                                     (In thousands)
<S>                                       <C>            <C>            <C>
     1998............................     $131           $725           $856
     1999............................       --            725            725
     2000............................       --            726            726
     2001............................       --            726            726
     2002............................       --            659            659
     Thereafter......................       --            983            983 
                                          ----         ------         ------
                                           131          4,544          4,675
Less: amount representing interest...       (2)        (1,231)        (1,233)
                                          ----         ------         ------
Present value of payments............      129          3,313          3,442
Less: current portion................     (129)          (390)          (519)
                                          ----         ------         ------
                                          $  0         $2,923         $2,923
                                          ====         ======         ======
</TABLE>
Long-term obligations in the accompanying balance sheet also include extended
warranty obligations of $51,000 at January 3, 1998.  Interest expense 
aggregated $637,000, $530,000 and $330,000 in 1997, 1996 and 1995, 
respectively.

NOTE 5--CAPITAL STOCK AND STOCK COMPENSATION PLANS

At January 3, 1998, the Company had three stock-based compensation plans.  The 
Company applies APB Opinion 25 and related interpretations in accounting for 
its plans.  Accordingly, no compensation cost has been recognized for its fixed 
stock option plans and its stock purchase plan.  Had compensation cost for the 
Company's three stock-based compensation plans been determined based on the 
fair value at the grant dates for awards under those plans consistent with the 
method of FASB Statement 123, the Company's pro forma results of operations and 
pro forma net income (loss) per share would have been as follows:

<TABLE>
<CAPTION>
(In thousands, except per share data)               1997         1996         1995           
                                                    ----         ----         ----
<S>                                              <C>            <C>         <C>
Net income (loss):
    As reported......................            $(30,811)      $8,625      $(12,435)
    Pro forma........................            $(36,102)      $4,798      $(14,323)
Basic net income (loss) per share:
    As reported......................              $(1.38)      $ 0.39        $(0.57)
    Pro forma........................              $(1.62)      $ 0.22        $(0.66)
Diluted net income (loss) per share:
    As reported......................              $(1.38)      $ 0.39        $(0.57)
    Pro forma........................              $(1.62)      $ 0.22        $(0.66)
 
</TABLE>




<PAGE> 49
Fixed Stock Option Plans

Under the Incentive Stock Option Plan, the Company may grant options to its 
employees and directors for up to 9.5 million shares of common stock.  Under 
the 1997 Non-Officer Stock Option Plan, the Company may grant options to its 
employees (who are not officers or directors) for up to one million shares of
common stock.   Under both plans, options are granted at an exercise price not
less than the fair market value of the stock on the date of grant.  The options
vest over periods up to 50 months and expire 10 years after the date of grant,
except in the event of the termination or death of the employee, whereupon 
vested shares must be exercised within 90 days or six months, respectively.  
Under the 1997 Non-Officer Stock Option Plan, vesting for these options may 
accelerate upon the optionee meeting certain pre-determined goals.

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average 
assumptions: 

<TABLE>
<CAPTION>
                                                  1997               1996               1995
                                                  ----               ----               ----
<S>                                               <C>                <C>                <C>
Estimated dividends...................            none               none               none
Expected volatility...................            55%                57%                57%
Risk-free interest rate...............            5.6%-6.9%          5.0%-6.3%          5.5%-7.7%
Expected life from vest date (years)..            0.29               0.41               0.41

</TABLE>

A summary of the status of the Company's fixed option plans as of January 3, 
1998, December 28, 1996, and December 30, 1995 and changes during the years 
ending on those dates is presented as follows:

<TABLE>
<CAPTION>
                                        1997                       1996                       1995
                               -----------------------    -----------------------    -----------------------
                               Shares   Weighted Avg.     Shares   Weighted Avg.     Shares   Weighted Avg.
                               (000's)  Exercise Price    (000's)  Exercise Price    (000's)  Exercise Price
                               -------  --------------    -------  --------------    -------  -------------- 
<S>                            <C>         <C>            <C>         <C>            <C>         <C>
Outstanding at beginning 
   of year..................   3,618       $16.71         3,148       $16.97         2,614       $17.34
Granted.....................   1,190        12.51         1,044        15.49           898        14.90
Exercised...................    (143)        1.65          (257)       13.02           (85)        9.68
Forfeited...................    (967)       16.58          (317)       18.19          (279)       16.18
                               -----       ------         -----       ------         -----       ------
Outstanding at end of year..   3,698       $15.98         3,618       $16.71         3,148       $16.97
                               =====       ======         =====       ======         =====       ======
Options exercisable
  at year-end...............   2,103       $17.63         1,940       $17.60         1,632       $17.66
Weighted-average fair value
  of options granted during
  the year..................               $ 4.91                     $ 6.50                     $ 6.37 
</TABLE>



<PAGE> 50
The following table summarizes information about fixed stock options 
outstanding at January 3, 1998:
<TABLE>
<CAPTION>
                              Options Outstanding                       Options Exercisable
                  --------------------------------------------     -----------------------------
                     Number      Weighted-Avg.   Weighted-Avg.        Number       Weighted-Avg.
  Range of        Outstanding      Remaining       Exercise        Exercisable       Exercise
Exercise Prices     (000's)    Contractual Life     Price            (000's)          Price
---------------   -----------  ----------------  -------------     -----------     -------------
<S>                  <C>          <C>                <C>              <C>              <C> 
$ 0.50-12.38           863        7.8 years          $10.99             242            $10.08
 12.63-13.75           712        7.3 years           13.28             404             13.21
 14.00-15.44           650        6.7 years           14.78             402             14.92
 15.88-17.63           773        6.9 years           17.04             408             17.17
 17.88-35.63           700        4.7 years           24.82             647             25.18
                     -----        ---------          ------           -----            ------
                     3,698        6.7 years          $15.98           2,103            $17.63
                     =====        =========          ======           =====            ======
</TABLE>


Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, the Company is authorized to issue up 
to one million shares of common stock to its full-time employees, nearly all of
whom are eligible to participate.  Under the terms of the plan, employees may 
elect to have up to 15% of their gross salaries withheld by payroll deduction 
to purchase the Company's common stock.  The purchase price of the stock is 85%
of the lower of market price at the beginning or end of each six-month 
participation period.  Under the plan, employees purchased 139,000, 100,000 and
85,000 shares in 1997, 1996 and 1995, respectively.

The fair value of each stock purchase plan grant is estimated on the date of 
grant using the Black-Scholes model with the following assumptions: 

<TABLE>
<CAPTION>                                         1997            1996            1995
                                                  ----            ----            ----      
<S>                                               <C>             <C>             <C>
Estimated dividends..................             none            none            none
Expected volatility..................             55%             57%             57%
Risk-free interest rate..............             5.3%-5.6%       5.0%-5.5%       6.4%-5.7%
Expected life (years)................             0.5             0.5             0.5
Weighted-average fair value of 
  purchase rights granted............             $4.14           $4.01           $5.14

</TABLE>

Stockholder Rights Plan

The Board of Directors adopted on January 24, 1991 and amended on August 23, 
1995 a Stockholder Rights Plan ("Rights Plan") in which preferred stock 
purchase rights were distributed as a dividend at the rate of one right for 
each share of Exabyte common stock held as of February 15, 1991.  The Rights 
Plan is designed to deter coercive or unfair takeover tactics and to prevent an
acquiring entity from gaining control of the Company without offering a fair 
price to all of the Company's stockholders.

<PAGE> 51
Each right will entitle the holders of the Company's common stock to purchase 
one one-hundredth of a share of preferred stock at an exercise price of $75, 
subject to adjustment in certain cases to prevent dilution.  The rights are 
evidenced by the common stock certificates and are not exercisable or 
transferable apart from the common stock until the earlier of ten days after 
the date on which a person or group has acquired beneficial ownership of 15% or
more of the common stock (an "Acquiring Entity") or ten business days after the
public announcement of the commencement of a tender or exchange offer that 
would result in the Acquiring Entity owning 15% or more of the common stock.
Further, the rights generally entitle each right holder(except the Acquiring 
Entity) to purchase that number of shares of the Company's common stock which 
equals the exercise price of the right divided by one-half of the current 
market price of the common stock if any person becomes the beneficial owner of
15% or more of the common stock.  If an Acquiring Entity purchases at least 15%
of the Company's common stock, but has not acquired 50%, the Board of Directors
may exchange the rights (except those of the Acquiring Entity) for one share of
common stock per right.  In addition, under certain circumstances, if the 
Company is involved in a merger or other business combination in which the 
Company is not the surviving corporation, the rights entitle the holder to buy
common stock of the Acquiring Entity with a market value of twice the exercise
price of each right.

The Company is generally entitled to redeem the rights for $.01 per right at 
any time until ten days following a public announcement that a 15% stock 
position has been acquired and in certain other circumstances.  The rights, 
which do not have voting rights, will expire on February 15, 2001, unless 
redeemed or exchanged earlier by the Company pursuant to the Rights Plan. 

NOTE 6--INCOME TAXES

Pretax income (loss) was taxed in the following jurisdictions:

                        1997          1996         1995
                      --------      --------     --------
                                 (In thousands)

Domestic..........    $(50,899)    $ 14,666      $(27,647)
Foreign...........      (2,224)      (1,983)        4,619
                      --------     --------       -------
                      $(53,123)    $ 12,683      $(23,028)
                      ========    =========     =========


















<PAGE> 52
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
                        1997          1996         1995
                      --------      --------     --------
                                 (In thousands)
<S>                    <C>           <C>          <C>
Current:
  Federal.........     $(15,607)     $1,739       $ (275)
  State...........       (1,535)        176          205 
  Foreign.........          182       1,072        1,739
Deferred:
  Federal.........       (4,988)      2,927      (11,396)
  State...........         (364)        319         (866)
  Foreign.........           --      (2,175)          -- 
                       --------      ------     --------
                       $(22,312)     $4,058     $(10,593)
                       ========      ======     ========
</TABLE>

Total income tax provision (benefit) differs from the amount computed by
applying the U.S. federal income tax rate of 35% to income (loss) before income
taxes for the following reasons:

<TABLE>
<CAPTION>
                                  1997          1996         1995 
                                -------       -------      -------
                                           (In thousands)
<S>                              <C>           <C>          <C>
U.S. federal income tax
  at statutory rate..........    $(18,593)     $4,438       $ (8,060)
State income taxes, net
  of federal benefit.........      (1,362)        436           (998)
Research and development
  credits....................      (1,500)       (304)          (420)
Tax exempt interest..........        (465)       (666)          (414)
Foreign sales corporation....          --        (105)          (215)
Prior year filing effects....      (1,210)         --             --
Other........................         818         259           (486)
                                 --------      ------       --------
                                 $(22,312)     $4,058       $(10,593)
                                 ========      ======       ========
</TABLE>















<PAGE> 53
Deferred tax assets are attributable to the following:
<TABLE>
<CAPTION>
                                                 January 3,       December 28,
                                                    1998              1996
                                                 ----------       ------------
                                                        (In thousands)
<S>                                               <C>               <C>
Warranty reserves...........................      $5,358            $5,098
Property and equipment......................       2,895             3,470
Net operating loss carryforwards:
   Domestic.................................       2,109             2,109
   Foreign..................................       2,175             2,175
Credit carryforwards........................       2,096             1,291
Bad debt and revenue reserves...............       2,667             2,301
Goodwill....................................       1,131             1,245
Inventory reserves..........................       6,991             4,517
Other.......................................       4,156             2,021
                                                 -------           -------
                                                 $29,578           $24,227
                                                 =======           =======
</TABLE> 

At January 3, 1998, domestic net operating loss carryforwards of $6,026,000 are 
available to offset future taxable income.  Utilization of the carryforwards 
are subject to an annual limitation of $670,000 through 2005.  Foreign net 
operating loss carryforwards may be carried forward indefinitely.  In addition,
the Company has unused research and development credits of $1,500,000 which 
expire in 2012 and alternative minimum tax credits of $539,000 which may be 
carried forward indefinitely.

NOTE 7--LEASE COMMITMENTS

The Company leases its office, production and sales facilities under various 
operating lease arrangements.  Most of the leases contain various provisions 
for rental adjustments including, in certain cases, a provision based on 
increases in the Consumer Price Index.  In addition, most of the leases require
the Company to pay property taxes, insurance and normal maintenance costs.
Future minimum lease payments under these arrangements are as follows:
<TABLE>
                                                        (In thousands)
     <S>                                                   <C>
     1998...................................               $ 6,133
     1999...................................                 5,917
     2000...................................                 4,957
     2001...................................                 4,682
     2002...................................                 3,824
     Thereafter.............................                 4,413
                                                           -------
                                                           $29,926
                                                           =======

</TABLE>

Rent expense aggregated $5,971,000, $5,906,000 and $6,061,000 in 1997, 1996 and
1995, respectively.



<PAGE> 54
NOTE 8-EMPLOYEE BENEFIT PLAN

The Company maintains a qualified Section 401(k) Savings Plan which allows 
eligible employees to contribute up to 15% of their salaries on a pre-tax 
basis.  Company contributions to the plan are discretionary.  The Company 
recorded as expense matching contributions totaling $920,000, $801,000 and 
$691,000 in 1997, 1996 and 1995, respectively.  Company contributions are fully
vested after six years of employment.

NOTE 9-FOREIGN OPERATIONS AND GEOGRAPHIC INFORMATION

The following table summarizes the Company's operations in different
geographic areas:

<TABLE>
<CAPTION>
(In thousands)                          United                                 
                                        States        Europe       Eliminations    Consolidated 
                                       --------      --------      ------------    ------------
<S>                                    <C>           <C>           <C>             <C>
YEAR ENDED JANUARY 3, 1998
Sales to unaffiliated customers.....   $260,989      $74,695       $     --        $335,684
Transfers between geographic areas..     13,079        2,626        (15,705)             --
                                       --------      -------       --------        --------
Total net sales.....................   $274,068      $77,321       $(15,705)       $335,684
                                       ========      =======       ========        ========
Net income(loss)....................   $(29,370)     $(1,441)      $     --        $(30,811)
                                       ========      =======       ========        ========
Identifiable assets.................   $218,328      $34,334       $(31,316)       $221,346
                                       ========      =======       ========        ========

YEAR ENDED DECEMBER 28, 1996  
Sales to unaffiliated customers.....   $301,270      $61,621       $     --        $362,891
Transfers between geographic areas..     20,466        7,049        (27,515)             --
                                       --------      -------       --------        --------
Total net sales.....................   $321,736      $68,670       $(27,515)       $362,891
                                       ========      =======       ========        ========
Net income (loss)...................   $  9,092      $  (467)      $     --        $  8,625 
                                       ========      =======       ========        ========
Identifiable assets.................   $239,656      $39,218       $(22,748)       $256,126
                                       ========      =======       ========        ========

YEAR ENDED DECEMBER 30, 1995
Sales to unaffiliated customers.....   $309,532      $64,615       $     --        $374,147
Transfers between geographic areas..     23,151        9,854        (33,005)             --
                                       --------      -------       --------        --------
Total net sales.....................   $332,683      $74,469       $(33,005)       $374,147
                                       ========      =======       ========        ========
Net income (loss)...................   $(15,085)     $ 2,650       $     --        $(12,435)
                                       ========      =======       ========        ========
Identifiable assets.................   $233,740      $40,017       $(23,421)       $250,336
                                       ========      =======       ========        ========


</TABLE>




<PAGE> 55
Sales and transfers between geographic areas are accounted for at arm's length
prices, which generally provide a profit after coverage of all operating costs.
The identifiable assets by geographic areas are those assets used in the 
Company's operations in each area.  The Company's Far East operations have not 
been disclosed as a separate geographic area because revenues from Far East 
sales are recorded by entities in other geographic areas and Far East 
identifiable assets are less than 10% of consolidated assets.

United States export sales, which exclude revenues generated by European 
operations, were made to the following geographic areas:

<TABLE>
<CAPTION>

                         1997               1996               1995  
                        -------            -------            -------
                                       (In thousands)
<S>                     <C>                <C>                <C> 
Europe............      $27,023            $17,859            $18,426
Other.............       29,676             28,227             31,086
                        -------            -------            -------
                        $56,699            $46,086            $49,512
                        =======            =======            =======

</TABLE>

NOTE 10-RESTRUCTURING

During 1997, the Company incurred $34,947,000 in pre-tax restructuring charges 
related to formal decisions by the Company's Board of Directors to exit the 
desktop and low-end server market, which included closure of its (RTM) 
division.  These decisions were made in order to focus the Company on mid-range 
application server markets and establish a more competitive cost structure in 
those markets.

The Company incurred $3,123,000 in workforce reduction costs, including 
severance, outplacement and benefits.  The workforce reductions will be 
concluded by the second quarter of 1998 and result in worldwide involuntary 
terminations of approximately 200 employees. 

Inventory write-downs include charges of $16,890,000 relating to excess and
obsolete inventory associated with the decision to exit the desktop and low-end
server markets as well as non-cancelable supplier and customer commitments of
$7,794,000.  Asset write-downs of $7,140,000 include $3,075,000 of fixed assets
to be scrapped or sold, $3,065,000 of capitalized software development costs 
and investment write-downs on projects to be discontinued and $1,000,000 of 
lease abandonment costs.  

At January 3, 1998, the remaining accruals associated with this restructuring 
were $10,235,000, the majority of which will be paid out in the first half of 
1998.

The following table summarizes the activity in the Company's restructuring 
reserves during 1997:





<PAGE> 56
<TABLE>
<CAPTION>                                
(In thousands)                           Workforce         Inventory            Asset
                                         Reduction        Write-downs        Write-downs         Total
                                         ---------        -----------        -----------         -----
<S>                                      <C>               <C>                <C>                <C>
Restructuring charges...........         $3,123            $24,684            $7,140             $34,947
Asset write-downs...............             --            (16,890)           (6,140)            (23,030)
Cash payments...................         (1,480)              (134)               --              (1,614)
Additional charges/
    reclassifications...........           (196)               128                --                 (68)
                                         ------             ------            ------             -------
Balance, January 3, 1998........         $1,447             $7,788            $1,000             $10,235
                                         ======             ======            ======             =======

</TABLE>

Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL 
DISCLOSURE

     None reported.





































<PAGE> 57
PART III

Item 10.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning the Company's directors is incorporated by reference 
from the information contained in the Section entitled "Election of Directors"
in the Company's definitive Proxy Statement for the Company's 1998 Annual 
Meeting of Stockholders to be filed within 120 days after January 3, 1998, the 
close of its fiscal year ("Proxy Statement").  Information concerning 
compliance with Section 16(a) of the Securities Exchange Act of 1934 is 
incorporated by reference from the Section entitled "Compliance..." in the 
Proxy Statement. Information concerning the executive officers of the Company 
is set forth in Part I of this Form 10-K.

Item 11.
EXECUTIVE COMPENSATION

Information required by this Item is incorporated by reference from the Section
entitled "Summary of Compensation," contained in the Proxy Statement.

Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Information required by this Item is incorporated by reference from the Section
entitled "Security Ownership of Certain Beneficial Owners and Management" 
contained in the Proxy Statement.

Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.



























<PAGE> 58
PART IV

Item 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)	1.   Financial Statements

The following consolidated financial statements of Exabyte Corporation and 
Subsidiaries are included in Part II, Item 8.

Consolidated Financial Statements as of January 3, 1998 and December 28, 1996 
and for each of the three fiscal years in the period ended January 3, 1998.


                                                                     Page
                                                                     -----
Report of Independent Accountants...............................      36

Consolidated Balance Sheets.....................................      37

Consolidated Statements of Operations...........................      38

Consolidated Statements of Changes in Stockholders' Equity......      39

Consolidated Statements of Cash Flows...........................      40-41

Notes to Consolidated Financial Statements......................      42-56


(a)	2.   Financial Statement Schedules

Schedules-Years ended January 3, 1998, December 28, 1996 and December 30, 1995.

VIII     -Valuation and Qualifying Accounts and Reserves........      62   

All other schedules are omitted because they are inapplicable, not required 
under the instructions, or the information is included in the financial 
statements or notes thereto.

(a)       3.       Exhibit Index

     Exhibit
      Number       Description
------------------------------

         3.1       Restated Certificate of Incorporation. (1)
         3.2       Certificate of Determination of Preference of Series A 
                   Junior Participating Preferred Stock. (2)
         3.3       By-laws of the Company, as amended.(13)
      **10.1       Incentive Stock Plan, as amended and restated on 
                   January 16, 1997. (15)
      **10.2       Stock Option Agreement used in connection with the 
                   Incentive Stock Plan. 
      **10.3       1990 Employee Stock Purchase Plan. (16)
      **10.4       Employee Stock Purchase Plan Offering used in connection 
                   with the 1990 Employee Stock Purchase Plan. (16)
      **10.5       Form of participation agreement used in connection with the 
                   1990 Employee Stock Purchase Plan. (3)
        
<PAGE> 59
      **10.6       1997 Non-officer Stock Option Plan, as adopted by the Board
                   of Directors on December 23, 1997. (17)   
      **10.7       Stock Option Agreement used in connection with the 1997 Non-
                   Officer Stock Option Plan. (17)
        10.8       Agreement for the sale and transfer of all shares in Grundig 
                   Data Scanner GmbH dated September 13, 1994. (12)
        10.9       Form of Indemnity Agreement entered into by the Company 
                   with each director and executive officer of the Company.(14)
        10.10      8mm Mechanical Components Supply Agreement, dated April 1, 
                   1990, among Sony Corporation, the Company and Nihon Exabyte
                   Corporation. (5)
        10.11      First Amendment, 8mm Mechanical Components Supply Agreement,
                   dated July 9, 1992, among Sony Corporation, the Company and 
                   Nihon Exabyte Corporation. (11)
        10.12      Agreement, dated November 8, 1990, between Sony Corporation 
                   and the Company.(6)
        10.13      Lease Agreement, dated December 1, 1989, between the Company 
                   and Eastpark Associates. (4)
        10.14      First and Second Addenda, dated May and July 16, 1990 
                   respectively, to the Lease Agreement, dated December 1, 
                   1989, between the Company and Eastpark Associates. (5)
        10.15      Lease Agreement, dated July 2, 1990, between the Company 
                   and SBR Investments. (5)
        10.16      Lease Agreement, dated July 2, 1990, between the Company 
                   and The First National Bank in Boulder, Trustee for the 
                   Barrell Family Trust and Frank R. Drexel. (5)
        10.17      Lease Agreement, dated December 9, 1991, between the 
                   Company and Eastpark Technology Center, Ltd. (7)
        10.18      Option Contract, dated December 9, 1991, between the 
                   Company and Eastpark Technology Center, Ltd. (7)
        10.19      Lease Agreement, dated May 8, 1992, between the Company 
                   and Eastpark Associates, Ltd. (8)
      **10.20      1998 Officer Bonus Plan.
        10.21      Rights Agreement, dated January 24, 1991, between the 
                   Company and The First National Bank of Boston, as Rights 
                   Agent. (2)
        10.22      Amendment to the Rights Agreement, dated August 4, 1995, 
                   between the Company and The First National Bank of Boston 
                   as Rights Agent. (13)
        10.23      Vail/Steamboat 8mm Mechanical Components Supply Agreement, 
                   dated January 1, 1992, among Sony Corporation, Nihon 
                   Exabyte Corporation and the Company. (9)
        10.24      First Amendment of Vail/Steamboat 8mm Mechanical Components
                   Supply Agreement, dated April 1, 1994. (14)
        10.25      Agreement and Plan of Reorganization By and Among Exabyte 
                   Corporation, EXB Merger Corporation, and R-Byte, Inc. (10)
        10.26      Asset Purchase Agreement dated February 19, 1993 By 
                   and Among Exabyte Corporation, Exabyte Acquisition 
                   Subsidiary Corporation and Everex Systems, Inc.  (11)
        10.27      Asset Purchase Agreement dated February 12, 1993 By and 
                   Among Exabyte Corporation, Tallgrass Corporation, a 
                   Delaware corporation, and Tallgrass Technologies 
                   Corporation, a Kansas corporation.  (11)
        10.28      8mm Mechanical Components Purchase Agreement, dated
                   December 11, 1996, among Hitachi Ltd. Electronic Sales 
                   Office, the Company and Nihon Exabyte Corporation.
      **10.29      Separation and Consulting Agreement, effective July 11, 
                   1998, by and among Peter D. Behrendt and the Company.
        21.1       List of Subsidiaries.  (16)
<PAGE> 60       
        23.1       Consent of Price Waterhouse LLP.
        24.1       Power of Attorney.  Reference is made to the signature page.

        **         Indicates management contracts or compensation plans or 
                   arrangements filed pursuant to Item 601(b)(10) of
                   Regulation S-K. 
==============                        

(1)     Filed as an Exhibit to the Company's Registration Statement on Form 
        S-1 (Registration No. 33-30941) filed with the Securities and Exchange 
        Commission (the "SEC") on September 8, 1989 or Amendments Nos. 1 and 2 
        thereto (filed on October 12, 1989 and October 16, 1989 respectively), 
        and incorporated herein by reference.

(2)    Filed as an Exhibit to the Company's Report on Form 8-K, as filed with 
        the SEC on January 26, 1991 and incorporated herein by reference.

(3)     Filed as an Exhibit to the Company's Registration Statement on Form 
        S-8 (Registration No. 33-33414), as filed with the SEC on February 9, 
        1990 and incorporated herein by reference.

(4)     Filed as an Exhibit to the Company's 1989 Annual Report on Form 10-K, 
        as filed with the SEC on March 27, 1990 and incorporated herein by 
        reference.

(5)     Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q, 
        as filed with the SEC on November 9, 1990 and incorporated herein 
        by reference.

(6)     Filed as an Exhibit to the Company's 1990 Annual Report on Form 10-K, 
        as filed with the SEC on February 27, 1991 and incorporated herein 
        by reference.

(7)     Filed as an Exhibit to the Company's 1991 Annual Report on Form 10-K, 
        as filed with the SEC on March 6, 1992 and incorporated herein by 
        reference.

(8)     Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q, 
        as filed with the SEC on May 9, 1992 and incorporated herein by 
        reference.

(9)     Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q, 
        as filed with the SEC on August 11, 1992 and incorporated herein by 
        reference.

(10)    Filed as an Exhibit to the Company's Report on Form 8-K, as filed 
        with the SEC on October 15, 1992 and incorporated herein by reference.

(11)    Filed as an Exhibit to the Company's 1992 Annual Report on Form 10-K, 
        as filed with the SEC on March 24, 1993 and incorporated herein by 
        reference.

(12)    Filed as an Exhibit to the Company's Report on Form 8-K, as filed 
        with the SEC on August 23, 1995 and incorporated herein by reference.

(13)    Filed as an Exhibit to the Company's 1994 Annual Report on Form 10-K, 
        filed with the SEC on March 17, 1995 and revised and filed on 
        March 24, 1995, incorporated herein by reference.

<PAGE> 61
(14)    Filed as an Exhibit to the Company's Report on Form S-8 (Registration 
        No. 33-64591), as filed with the SEC on November 27, 1995 and 
        incorporated herein by reference.

(15)    Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q, 
        filed with the SEC on November 12, 1997 and incorporated herein by 
        reference.

(16)    Filed as an Exhibit to the Company's Annual Report on Form 10-K, 
        filed with the SEC on March 19, 1997, and incorporated herein by 
        reference.

(17)    Filed as an Exhibit to the Company's Report on Form S-8, as filed with
        the SEC on February 9, 1998 and incorporated herein by reference.

(b)     Reports on Form 8-K

        No report on Form 8-K was filed during the fiscal quarter ended 
        January 3, 1998.








































<PAGE> 62
EXABYTE CORPORATION AND SUBSIDIARIES
Schedule VIII - Valuation and Qualifying Accounts and Reserves
(In thousands)
<TABLE>
<CAPTION>

   Col. A                                   Col. B        Col. C        Col. D         Col. E         Col. F 
 ----------                               ----------    ----------    ----------     ----------     ----------
                                           Balance       Charged
                                           at            to            Charged                        Balance
                                           Beginning     Costs         to                             at End
                                           of            and           Other                          of
Description                                Period        Expenses      Accounts       Deduction       Period
------------                              ----------    ----------    ----------     -----------     ----------
<S>                                        <C>           <C>           <C>            <C>             <C>
Year Ended December 30, 1995:
  Allowance for doubtful accounts.....     $1,023        $    88       $    --        $   (263) (1)   $   848
  
  Reserves for sales programs.........      3,431             --         8,635          (6,082) (2)     5,984
  
  Inventory valuation reserves........      2,760         34,269            --         (25,647) (3)    11,382
                                           ------        -------       -------         -------        -------
                                           $7,214        $34,357       $ 8,635        $(31,992)       $18,214
                                           ======        =======       =======        ========        =======  

Year Ended December 28, 1996:
  Allowance for doubtful accounts.....    $   848        $    39       $    --        $    632  (1)   $ 1,519
  
  Reserves for sales programs.........      5,984             --        11,121         (11,309) (2)     5,796

  Inventory valuation reserves........     11,382          2,495            --          (5,927) (3)     7,950
                                           ------        -------       -------        --------        -------
                                          $18,214        $ 2,534       $11,121        $(16,604)       $15,265
                                          =======        =======       =======        ========        =======  
Year Ended January 3, 1998:
  Allowance for doubtful accounts.....     $1,519        $   310       $    --        $   (813) (1)   $ 1,016
  
  Reserves for sales programs.........      5,796             --        14,176         (13,242) (2)     6,730

  Inventory valuation reserves........      7,950         21,038            --         (10,120) (3)    18,868
                                           ------        -------       -------        --------        -------
                                          $15,265        $35,553       $14,176        $(24,175)       $26,614
                                          =======        =======       =======        ========        =======  

</TABLE>
(1) Accounts written off, net of recoveries.
(2) Net credits issued to customers for sales programs.
(3) Use of inventory reserves against inventory.











<PAGE> 63
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Boulder, State of Colorado, on March 23, 1998.

EXABYTE CORPORATION



                     By:      /s/ Stephen F. Smith
                              -----------------------	
                              Stephen F. Smith
                     Title:   Chief Financial Officer, Vice President,
                              General Counsel and Secretary
                              (Principal Financial and Accounting Officer)
POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears 
below constitutes and appoints William L. Marriner and Stephen F. Smith, and 
each of them, as his true and lawful attorneys-in-fact and agents, with full 
power of substitution and resubstitution, for him and in his name, place, and 
stead, in any and all capacities, to sign any and all amendments to this 
report, and to file the same, with all exhibits thereto, and other documents 
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and 
authority to do and perform each and every act and thing requisite and 
necessary to be done in connection therewith, as fully to all intents and 
purposes as he might or could do in person, hereby ratifying and confirming all 
that said attorneys-in-fact and agents, or any of them, or their or his 
substitute or substitutes, may lawfully do or cause to be done by virtue 
hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as 
amended, this report has been signed by the following persons in the 
capacities and on the dates indicated.



/s/ William L. Marriner       Chairman of the Board, 
-----------------------       President, and Chief            March 23, 1998
William L. Marriner           Executive Officer 
                              (Principal Executive 
                              Officer)



/s/ Stephen F. Smith          Vice President, Chief 
-----------------------       Financial Officer, General      March 23, 1998
Stephen F. Smith              Counsel and Secretary 
                              (Principal Financial 
                              and Accounting Officer)



/s/ Peter D. Behrendt         Director                       
-----------------------                                       March 23, 1998
Peter D. Behrendt
<PAGE> 64

/s/ Bruce M. Holland          Director                       
-----------------------                                       March 23, 1998
Bruce M. Holland



                              Director                       
-----------------------                                       March 23, 1998
Thomas E. Pardun



                              Director                       
-----------------------                                       March 23, 1998
Mark W. Perry



/s/ Ralph Z. Sorenson         Director                       
-----------------------                                       March 23, 1998
Ralph Z. Sorenson



/s/ Thomas G. Washing         Director                       
-----------------------                                       March 23, 1998
Thomas G. Washing