<PAGE>  1
-----------------------------------------------------------------------------
                           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 2, 1999

          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.                                                       (x)

The approximate aggregate market value of the voting stock held by non-
affiliates of the registrant as of March 3, 1999 was $78,848,562 based on 
the closing sale price on such date.  The aggregate number of shares of 
common stock outstanding on March 3, 1999 was 16,174,064(a).
<PAGE>  2
Document incorporated by reference: Proxy Statement for the 1999 Annual 
Meeting of Stockholders scheduled to be held May 10, 1999: Part III, Items 
10, 11, 12, and 13.

(a) Excludes 6,472,119 shares of common stock held by directors, executive
officers and stockholders whose ownership exceeds ten percent of the common
stock outstanding at March 3, 1999.  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 as well as 8mm and DLTtape(TM) robotic 
tape libraries.  Exabyte also provides its own brand of recording media, 
software utilities and worldwide service and customer 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.

Exabyte's operations are segmented into three divisions, each responsible 
for a specific line of products or services.  The Drives & Media division is
responsible for Exabyte's line of 8mm tape drive products and media.  The 
Storage Automation Solutions division is responsible for Exabyte's robotic tape
libraries, systems offerings and related products. The Worldwide Quality and 
Customer Services division is responsible for all corporate and product 
quality, service operations, technical support, training and education, 
and service and customer support programs.

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 below entitled
"RISK FACTORS."

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

The Company manufactures 8mm tape drive products and robotic libraries, which
incorporate Exabyte's own 8mm tape drives and DLTtape(TM) drives manufactured 
by Quantum Corporation ("Quantum"). Exabyte's 8mm tape drive products offer 
data capacities ranging from 5GB to 40GB with standard data compression 
(described below). When commercially available, the Company's upcoming 
Mammoth 2 tape drive will offer a data capacity of up to 150GB (assuming a 
data compression of two and a half to one). These tape drive products address 
the mid-range to high-end server markets, the remainder of the market is 
largely served by 4mm and half-inch linear tape drives produced by competitors.
Exabyte's robotic tape libraries incorporate one or more tape 


<PAGE> 4
drives and multiple media cartridges to offer data capacities ranging from 
280GB to 8TB with standard compression, and up to 30TB with the Company's
upcoming Mammoth 2 tape drive.  In addition, Exabyte provides a variety of 
support services, as well as recording media and cleaning cartridges for its 
products.

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 such risks see "RISK FACTORS--Product Development," "RISK 
FACTORS--Media Constraints," "RISK FACTORS--Product Quality and Performance,"
"RISK FACTORS--Management of Business and Product Transitions" and "RISK 
FACTORS--Customer Dependence" below.

Drives & Media Division
=======================

Exabyte's 8mm tape drive products and media are the responsibility of Exabyte's
Drives & Media 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.  Additionally,
all of the Company's 8mm tape drives can be incorporated into one or more of 
Exabyte's 8mm robotic tape library offerings.  In 1998, sales of 8mm tape drive
products represented 53% of revenue, while in 1997 and 1996, sales represented 
59% and 65% of total revenue, respectively. 

Exabyte's 8mm tape drive products are based on helical scan technology, 
utilize a SCSI interface and incorporate a licensed compression algorithm 
for data compression.

The primary factors distinguishing the Company's tape drive products from one 
another are data capacity and transfer rate. Data Capacity refers to the total
amount of data that can be stored on a single media cartridge.  Transfer Rate 
refers to the speed at which data may be transferred to or from the tape drive.

All data capacities and transfer rates indicated for the products listed 
below are compressed and assume a compression ratio of two to one unless 
stated otherwise.  Actual compression will vary depending on the nature of 
the data and the drive and media quality.

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

Exabyte Mammoth

The Company's Mammoth 8mm tape drive targets large department networks and 
application servers.  Mammoth is Exabyte's fastest, highest capacity 8mm tape 
drive, with a data capacity of 40GB and a transfer rate of 6MB per second, and 
is backward 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 drives.  AME 
media is supplied to Exabyte primarily by Sony Corporation, a competitor of the
Company.  The Company has previously experienced constraints in the supply of 
AME media.  See "RISK FACTORS--Media Constraints" and "RISK FACTORS--Supplier 
Dependence" below.



<PAGE> 5
 
Mammoth-LT

Exabyte's Mammoth-LT 8mm tape drive is the Company's newest drive in the 
Mammoth product line.  Mammoth-LT targets low-end to high-end application 
servers and features a 28GB data capacity and a transfer rate of 4MB per 
second.  Mammoth-LT is backward read compatible with most of Exabyte's line 
of 8mm tape drives and is dependant upon and only writes to AME media.  See 
"RISK FACTORS--Media Constraints" and "RISK FACTORS--Supplier Dependence" 
below.

Exabyte Eliant(TM) 820

The Eliant(TM) 820 tape drive, which targets mid-range networks and smaller 
workstations, features a 14GB data capacity and a transfer rate of 2MB per 
second.

Upcoming 8mm Tape Drive Products
--------------------------------

Mammoth 2

The Exabyte Mammoth 2 8mm tape drive, currently in development, will be the 
second generation of Exabyte's original Mammoth drive.  It targets large 
department networks and application servers and will feature a data capacity 
of 150GB and a transfer rate of 30MB per second (assuming a compression ratio 
of two and a half to one, although actual compression may vary depending on 
the nature of the data and the drive and media quality).  Mammoth 2 will be 
backward compatible with Mammoth and will exclusively use AME media.  See 
"RISK FACTORS-Product Development," "RISK FACTORS--Media Constraints" and 
"RISK FACTORS--Supplier Dependence" below.  Worldwide shipment of Mammoth 2
to customers is expected to begin in mid-1999.

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

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, Mammoth-LT, Mammoth 2 and other follow-on Mammoth drives is
dependent upon the continuous supply of AME media.  There are several risks 
associated with dependence on this type of media, including possible delays or
cancellations of shipments by the Company if these components are not received
on a timely basis or at an acceptable quality level. See "RISK FACTORS--Media 
Constraints" below.  Sales of media and media related products represented 
approximately 23%, 15% and 12% of sales in 1998, 1997 and 1996, respectively.







<PAGE> 6
Storage Automation Solutions Division
=====================================

Exabyte's robotic tape libraries, systems offerings 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 1998, revenues from library sales were 20% 
of total revenue, while in 1997 and 1996, sales represented 18% and 14% of 
revenues, respectively.

All data capacities and transfer rates indicated for the products listed below
are compressed and assume a compression ratio of two to one unless stated 
otherwise.  Actual compression will vary depending on the nature of the data 
and the drive and media quality.

Current 8mm Robotic Tape Library Systems
----------------------------------------
Exabyte X200

The Exabyte X200 is Exabyte's most recent 8mm library offering.  The Exabyte 
X200 targets large application servers and networks.  This library features a 
scalable design which can incorporate from two to ten Mammoth tape drives and 
40, 80, 120, 160 or 200 AME media cartridges.  At full capacity, (10 Mammoth 
drives and 200 media cartridges) the Exabyte X200 offers a data capacity of 
8TB and an aggregate transfer rate of 60MB per second.

Exabyte 440/480

The Exabyte 440 and 480 libraries target large enterprise application servers 
and networks.  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. It is possible to upgrade the Exabyte 440
to an 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 an 
aggregate transfer rate of 24MB per second.

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. 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.  At full capacity (two Mammoth tape 
drives and 20 media cartridges), the Exabyte 220 offers a data capacity of 
800GB and an aggregate transfer rate of 12MB per second. 

Exabyte 10h

The Exabyte 10h library targets small department networks. 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.



<PAGE> 7
Exabyte EZ17(TM) Autoloader

The Exabyte EZ17(TM) Autoloader is Exabyte's 8mm library alternative to a 
stand-alone tape drive.  It incorporates one Mammoth tape drive and up to 
seven media cartridges.  The Exabyte EZ17(TM) targets small departmental 
workgroups to midrange file and application servers.  At full capacity, the 
EZ17(TM) offers a capacity of 280GB and a transfer rate of 6MB per second.

Current DLTtape(TM) Robotic Tape Library Systems
------------------------------------------------
Exabyte 690D

The Exabyte 690D is Exabyte's most recent DLTtape(TM) library offering.  The 
Exabyte 690D targets large client-server networks as well as large departmental
application servers.  This library features a scalable design which can 
incorporate from two to six Quantum DLT4000 or DLT7000 tape drives and 30, 
60 or 90 DLTtape(TM) media cartridges.  At full capacity (six DLT7000 drives 
and 90 media cartridges) the 690D offers a data capacity of 6.3TB and an 
aggregate transfer rate of 60MB per second.

Exabyte 230D

The Exabyte 230D targets large client-server and department networks.  The 
Exabyte 230D incorporates up to two DLT4000 or DLT7000 tape drives and up to 
30 media cartridges.  At full capacity (with two DLT7000 tape drives), the 
Exabyte 230D offers a data capacity of 2.1TB and an aggregate transfer rate 
of 20MB per second.

Exabyte 18D

The Exabyte 18D targets small department networks and mid-range file and 
application servers.  The Exabyte 18D library incorporates a single DLT4000 or
DLT7000 tape drive and up to eight media cartridges.  At full capacity (with 
a DLT7000 drive), the Exabyte 18D offers a data capacity of up to 560GB and 
an aggregate transfer rate of up to 10MB per second. 

Exabyte 17D Autoloader

The Exabyte 17D Autoloader is Exabyte's DLTtape(TM) library alternative to a 
stand-alone tape drive.  It incorporates one DLT4000 or DLT7000 tape drive 
and up to seven media cartridges.  The Exabyte 17D targets small departmental 
workgroups to midrange file and application servers.  At full capacity (with 
a DLT7000 drive), the 17D offers a capacity of 490GB and an aggregate transfer
rate of 10MB per second.

Future Storage Area Network Offerings
-------------------------------------

The Company intends to introduce products targeted at the emerging Storage 
Area Network market.  The Company's NetStorm(TM) product is in the early 
stages of development and its successful launch is subject to a number of 
third party dependencies, including the supply by third parties of party 
fibre switches, hubs, host bus adapters and backup and archive applications, 
as well as the Company's ability to recruit and train channel parties.  See 
"RISK FACTORS--Product Development," "RISK FACTORS--Supplier Dependence" and
"RISK FACTORS--Product and Quality Performance" below.



<PAGE> 8
Worldwide Quality and Customer Services Division
================================================

Exabyte's Worldwide Quality and Customer Services division provides a full 
range of warranty and post-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's OEM, reseller and end-user customers in the deployment, 
operation and maintenance of Exabyte products.

The service programs offered by the Worldwide Quality and Customer Services 
division 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
                                                      Advance exchange options
         Media........................................Warranty exchange
                                                      Data recovery
                                                      Media conversions
                                                      Data Migration

In 1998, revenue from service and support programs accounted for 7% of total 
revenue, while in 1997 and 1996 these programs accounted for 7% and 6% of 
revenues, respectively. 

MARKETING AND CUSTOMERS
-----------------------
Because the Company's marketing and sales functions are not unified under the 
general corporate function, marketing and sales are not carried out separately
by division.  As a result, the sales data set forth below represents total 
sales of all products.

The Company markets its products worldwide to OEMs and resellers, and provides
services directly to OEMs and to the customers of Exabyte's reseller customers.
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 (relative to reseller sales) as the new product successfully completes
the necessary qualification process. For a description of the risks associated 
with Exabyte's customers and customer dependence, see "RISK FACTORS--Customer 
Dependence," "RISK FACTORS--Market Demand" and "RISK FACTORS--Year 2000 
Compliance" below.

OEMs
----

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



<PAGE> 9
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 46% of total sales in 
1998. In 1997 and 1996, these sales were 49% and 51%, respectively, of total 
sales.

Resellers
---------

The Company's reseller customers purchase products for resale and may provide, 
for example, 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 Compaq 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.  See "RISK FACTORS--Market Demand" below.

The Company recently created a new category of reseller customers for the 
specific purpose of selling the Company's high-end libraries.  Exabyte Solution
Partners ("ESPs") are generally larger resellers who derive a significant 
portion of their overall revenues from the sale of storage products and 
services, and are therefore better suited to sell Exabyte's high-end library 
products.  The Company relies significantly on ESPs for the sale of its 
high-end libraries.  Any short-fall in sales to ESPs could have a material 
adverse impact on the Company's results of operations.  

Sales to resellers represented approximately 50%, 46% and 45% of sales in 
1998, 1997 and 1996, respectively.

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

Exabyte also markets its products overseas directly to international OEMs and
resellers.  In addition, the Company also serves OEMs and end-users through
its international resellers.  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. In addition, many of Exabyte's domestic customers ship 
a significant portion of Exabyte's products to their overseas customers. Direct
international sales accounted for approximately 30%, 32%, and 30% of sales in 
1998, 1997, and 1996, respectively. (See Note 9 of Notes to Consolidated 
Financial Statements.)

Currently, a very small percentage of the Company's international sales are 
denominated in foreign currencies and are affected by foreign exchange rate
fluctuations, as well as the European conversion to the euro.  In addition, 
changes in the foreign exchange rates or the euro conversion may adversely 
<PAGE> 10
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, See "RISK FACTORS--Foreign Sales" below.

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

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

IBM, Sun Microsystems and Ingram were the only three customers accounting 
for 10% or more of Exabyte's sales during fiscal 1998, while IBM and Sun 
Microsystems were the only two customers who accounted for 10% or more of 
sales during fiscal years 1997 and 1996.  IBM accounted for 15% of sales in 
1998 and 17% and 15% of sales in 1997 and 1996, respectively. Sun Microsystems
accounted for 11% of sales in 1998 and 13% and 11% of sales in 1997 and 1996 
respectively. Ingram accounted for 13% of sales in 1998.  These three customers
accounted for an aggregate of 39% of sales in 1998. 

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 sections "RISK FACTORS--Customer Dependence" and "RISK FACTORS--Market 
Demand" 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, particularly because 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
       -  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 commercial-
ization 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.  Future developments
of tape and optical technologies, as well as new forms of storage technologies,

<PAGE> 11
could create additional, significant competition to Exabyte.  Other risks 
include loss of market share, timing to market, price erosion and pricing 
pressure.  For a description of these and other risks associated with Exabyte's
competition, see "RISK FACTORS--Competition" below. 

Drives & Media Division
-----------------------

Exabyte's 8mm tape drive products face competition from companies offering 
8mm, half-inch, 4mm and minicartridge tape drive products.  Exabyte's most 
significant 8mm competitor is currently Sony with its 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.  These 4mm tape drives 
are typically lower in price and smaller in size, making them more attractive 
to the low end of the market.

Among Exabyte's competitors that offer half-inch tape drive products are 
Quantum, Fujitsu, IBM, Overland Data, StorageTek and Tandberg.  The half-
inch products currently being offered generally have higher capacities and 
transfer rates than Exabyte's products.  Specifically, Quantum's DLT7000 tape 
drive competes in the same market segment as Exabyte's Mammoth drive, and 
offers storage capacities and transfer rates greater than Mammoth or any of 
Exabyte's other current tape drive products.  There are several companies 
which offer competitive media products, as well.

Storage Automation Solutions Division
-------------------------------------

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 DLTtape(TM) library competitors are ADIC, ATL, Hewlett-Packard, 
Quantum, Breece Hill, and StorageTek.

Worldwide Quality and Customer Services Division
---------------------------

Exabyte's service programs suffer competitive pressures from other tape drive 
and library manufacturers, as well as independent service providers.

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

Both the Drives & Media division and the Storage Automation Solutions division
manufacture parts or complete units of their 8mm tape drive and library 
products at the Company's 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 for such components.  Exabyte has executed master purchase 
agreements with some of its sole-source suppliers and conducts business with
the rest of its suppliers on a purchase order basis.  Reliance on sole-source 
suppliers can result in possible shortages of key components, reduced control 
over delivery schedules, manufacturing yields, quality and costs.  See "RISK 
FACTORS--Supplier Dependence" below.  Further, many such components are sourced
from suppliers located outside the U.S.  See "RISK FACTORS--Foreign Exchange 
and Import Restrictions" below.
<PAGE> 12
Exabyte obtains key materials and components necessary for manufacturing its 
products from its German subsidiary, Exabyte Magnetics GmbH ("EMG"), as well 
as from a number of third-party suppliers.  Many of these key components are 
made to the Company's specifications and are acquired from sole sources.  
See "RISK FACTORS--Supplier Dependence" and "RISK FACTORS--Mammoth" below.

The Company manufactures a mechanical deck mechanism for the Company's Mammoth 
line of products (including its upcoming Mammoth 2 tape drive).  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 or with 
future Mammoth products.  For a description of the risks associated with the 
production of the Company's Mammoth product line, see "RISK FACTORS--Product 
Development" and "RISK FACTORS--Media Constraints" below.

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

         Component                          Supplier(s)
         ---------                          ---------               
         8mm tape decks.....................Hitachi
         Circuit boards.....................Solectron
         Recording heads....................Alps
                                            EMG 
         Reel Motor.........................Kumagaya
         Cartridge Loader...................Yano
         Misc. Deck Components..............Kenseisha
         AME Media..........................Sony


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

Hitachi currently supplies the tape deck components for Exabyte's Eliant(TM)820
8mm tape drives.  The components incorporated into this product are customized
to the Company's specifications.  The parties entered into an agreement on 
December 11, 1996, for the supply of the Eliant(TM)820 tape deck component.
The agreement has a term of three years, subject to two automatic 12-month 
extensions. While the purchase agreement contains 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.

The relationship with Sony as a supplier of 8mm tape decks began in 1987.  Sony
supplied customized tape decks for Exabyte's 8205XL and 8505XL 8mm tape drives
through July 1998.  The parties negotiated a contract amendment to terminate 
the contract and end the supply of 8mm tape decks as of July 1998.  The 
amendment provides for the supply of spare parts related to the tape decks 
supplied by Sony through July 31, 2003.

There can be no assurance that the supply of these decks or spare parts from 
Hitachi or Sony 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 

<PAGE> 13
termination of the production of the 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,
see "RISK FACTORS--Year 2000 Compliance", "RISK FACTORS--Supplier Dependence" 
and "RISK FACTORS--Foreign Sourcing" below.

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

The Company's research and development expenses were approximately $29.9 
million, $40.9 million and $38.4 million in 1998, 1997 and 1996, 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 March 4, 1999, Exabyte owned 57 
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 
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.  See "RISK FACTORS--Patent Infringement 
and Proprietary Rights" below.


<PAGE> 14
There are a number of risks associated with Exabyte's proprietary rights.  
For a description of these risks, see "RISK FACTORS--Patent Infringement and
Proprietary Rights" and "RISK FACTORS--Third Party Contract Manufacturing" 
below.

BACKLOG
-------

Backlog consists of purchase orders for which a delivery schedule within six
months has been specified by the customer.  Although the Company's backlog is 
not reported by division, it is possible to estimate each division's backlog.
The Company's total backlog as of January 2, 1999 and January 3, 1998 totaled 
approximately $19.8 million and $22.0 million, respectively. Backlog as of 
January 2, 1999 was approximately $17.8 million for the Drives & Media 
division, $1.7 million for the Storage Automation Solutions division and 
$148,000 for the Worldwide Quality and Customer Services division. Exabyte'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. Exabyte 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 availa-
bility. For these reasons, the Company's backlog as of any particular date may
not be indicative of its actual sales for any succeeding fiscal period.  For 
a description of these and other risks associated with Exabyte's backlog 
management, see "RISK FACTORS--Inventory Write-downs and Special Charges" and 
"RISK FACTORS-Customer Dependence" 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, Singapore, Indonesia and Malaysia.  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.)  See "RISK FACTORS-Market Risk" below.

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 
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 
components produced overseas into its products.

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 Consolidated Financial Statements.)  As a result, any amounts payable 
to a subsidiary or owed by a subsidiary are subject to the foreign exchange 
rate applicable between the U.S. dollar and the local currency and could have 
a material adverse effect on the Company's results of operations.  In addition, 
the Company's foreign operations are subject to the risks generally applicable 


<PAGE> 15
to the conduct of business in such countries.  For a description of these and 
other risks associated with Exabyte's foreign involvement, see "RISK FACTORS--
Foreign Operations," "RISK FACTORS--Foreign Sourcing" and "RISK FACTORS--
Foreign Sales" below.

EMPLOYEES
---------

As of February 27, 1999, the Company had 1,212 full-time and part-time 
employees worldwide.  None of the Company's employees is represented by a 
labor union although Exabyte's German subsidiary is subject to an organized 
Works Council.

The Company reduced its workforce in October 1997 and again in January 1998, 
partially as a result of its decision to close its Eagle(RTM) division.  These 
reductions resulted in the involuntary termination of approximately 200 
employees.

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, see 
"RISK FACTORS--Key Employees" below.

RISK FACTORS
------------
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.

The Company is currently developing Mammoth 2, a follow-on product to its 
Mammoth drive.  Any inability or delay of the Company to develop and 
manufacture this product would have a material adverse impact on its sales, 
as well as the sale of Mammoth tape drives and would have a material adverse 
effect on the Company's results of operations.

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. Additionally, 
the Company's inability to successfully introduce announced products would 
have a material adverse effect on the Company's results of operations.
<PAGE> 16
Media Constraints
-----------------

The Company has in the past experienced a shortage of the AME media used for 
its Mammoth product.  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, AME media is sourced primarily 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 delay the introduction of future 
Mammoth tape drive products, including Mammoth 2, which could have a material 
adverse effect on the Company's competitive position and its results of 
operations.

The Company's ability to obtain an adequate supply of AME media has been, and
may be further affected by any constraint in Sony's production of the media, 
the diversion 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 has obtained a second source for the production of AME media, although
the media from this second source has not passed Exabyte's qualification 
process. In addition, Exabyte is in the beginning stages of evaluating a third
source for the production of AME media. However, there can be no assurance 
that any media from these suppliers will pass the Company's qualification 
processes or that the supplier's production of the media will be in the volume
or of the quality required by Exabyte.

The Company has also engaged AME sources in an effort to procure the supply 
of AME media for its Mammoth 2 product.  This evaluation and qualification 
process is in the early stages.  There can be no assurance that any media from
these suppliers will pass the Company's qualification processes or that the 
supplier's production of the media will be in the volume or of the quality 
required by Exabyte.  Any failure of the Company to obtain such media in 
sufficient volume, at an acceptable quality level and at a competitive price,
could force the Company to delay or cancel shipments of Mammoth 2, including 
associated libraries, which could have a material adverse effect on the 
Company's competitive position and its results of operations.

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

The Company relies on sole-source suppliers for certain critical components.  
A reliance on sole-source suppliers involves several risks, including possible 
shortages 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 Exabyte depends on Hitachi as the principal source for 
its 8mm mechanical tape decks in Exabyte's 8mm tape drive products (excluding 
the Mammoth product line), the Company may encounter delays in or termination 
of the production of these 8mm tape drive products should supply problems arise 
with Hitachi.  While Exabyte has supply contracts with Hitachi, there can be 
no assurance that the supply of tape decks will continue at required levels, 
or that prices will remain at the current levels.  Additionally, while there 
<PAGE> 17
are other suppliers of 8mm decks, there can be no assurance 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 obtains its ASIC chips for its Mammoth line of tape drives from 
several different sources.  However, because of the substantial lead-time 
necessary for Exabyte to qualify other suppliers, Exabyte's inability to 
obtain an adequate supply of chips at a competitive price and high quality 
from any of its ASIC chip suppliers could cause the Company to delay or cancel
shipments of its Mammoth products, which could have a material adverse effect 
on the Company's competitive position and its results of operations.  

The Company relies solely on Quantum, a competitor of the Company, to supply 
the DLTtape(TM) tape drives for Exabyte's DLTtape(TM) libraries.  The Company 
may encounter delays in shipping or termination of the production of its 
DLTtape(TM) libraries should supply problems arise with Quantum.  While Exabyte
has a purchase agreement with Quantum, there can be no assurance that the 
supply or price of the 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."

Exabyte's German subsidiary, EMG, develops, manufactures and supplies scanners
and recording heads, key components of Exabyte's Mammoth and Mammoth 2 
products.  These components require a high degree of manufacturing and 
technical expertise.  The Company 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, in particular 
with its upcoming Mammoth 2 product, which could have a material adverse 
effect on the Company's results of operations.

Exabyte's Mammoth and Mammoth 2 tape drives incorporate a deck assembly 
mechanism manufactured by 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 this deck 
assembly requires a complex manufacturing process that the Company had never 
undertaken before.  

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.
<PAGE> 18
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 
resources than Exabyte.  There can be no assurance that these competitors will 
not devote their resources to the aggressive marketing of storage product
technologies.  There can be no assurance that these technologies will 
not be equivalent or superior to the Company's technology or 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 AME media for Exabyte) and in-
directly 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 DLT7000 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.

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.  The Company is also in the process of addressing 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. 

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> 19
Exabyte has in the past lost key employees to competitors, including start-up
companies in direct competition with Exabyte, and other companies and may 
likely lose key employees in the future.  Although Exabyte has incentive 
programs in place that 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.

Year 2000 Compliance
--------------------

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

The Company itself is heavily dependent upon the proper functioning of its own 
computer or data-dependent systems, including, but not limited to, its systems 
in areas such as information, business, financial, operations, manufacturing 
and service.  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 an internal 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 "Plan").
To date, the Company is executing according to its Plan.  An inventory of all
critical systems has been completed. Systems upgrades, that are Year 2000 
compliant, have been completed, or are planned during 1999 in response to 
normal business needs.  The Company anticipates completing the remaining 
portions of the Plan during the first half of 1999, with testing of these 
systems being completed during the fourth quarter of 1999.  In addition, the 
Company's subsidiaries are in the process of being incorporated into the 
Company's Plan to become Year 2000 compliant.  Exabyte anticipates that all 
subsidiaries are or will be Year 2000 compliant by the first quarter of 1999.

There can be no assurance that the Company will be able to upgrade any or all 
of its, or its subsidiaries', major systems in accordance with the Plan or, 
once upgraded, that the systems will be Year 2000 compliant.  Should the 
Company fail to upgrade such systems in a timely manner, or should those 
upgrades fail to be Year 2000 compliant, the Company may be unable to conduct 
business or manufacture its products, which could cause a material adverse 
effect on the Company's results of operations.

The Company's suppliers (particularly sole-source and long lead-time 
suppliers) and key customers 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 them 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.  Additionally, 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 also have a material adverse effect on the Company's results of 
operations.  The Company is currently addressing the Year 2000 readiness of  
its suppliers and customers, as well as each of their respective suppliers, 


<PAGE> 20
to address their Year 2000 readiness in a timely manner; however, there can 
be no assurance that any such effort will be successful.  Letters have been 
sent to critical suppliers for information to assess their readiness. The 
Company anticipates that this effort will continue throughout 1999.

Exabyte has incurred to date no incremental material costs associated with its 
efforts to become Year 2000 compliant, as the majority of the costs have 
occurred as a result of normal upgrade procedures.  Furthermore, the Company 
believes that future costs associated with its Year 2000 compliance effort will 
not be material.

Currently, the Company is developing a contingency plan should the Company be
unsuccessful in its efforts to become Year 2000 compliant.  The Company 
anticipates that its contingency plan should be finalized by the third 
quarter of 1999. The Company could incur significant material costs related 
to its contingency plan.  Such material costs are currently unknown but may 
include costs associated with creating a buffer stock of the Company's products
or other such measures the Company feels is necessary to maintain operations 
should the Company face adverse difficulties relating to the Year 2000 problem.

The Company believes that the tape drives and tape libraries manufactured or 
produced by the Company do not use and have not used date data in order to 
meet stated functional performance characteristics.  The Company further
believes such products accurately process date data (including, but not 
limited to, calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including leap year calculations, 
provided such products operate in accordance with the Company's published 
specifications, and further provided that all hardware, third-party software 
and firmware used in combination with the Company's products properly exchange
date data with such products.  However, there can be no assurance that the 
Company's products will function in this manner.  Any failure of the Company's
product to perform in accordance with specifications could result in the loss 
of critical user data, resulting in claims against the Company for damages 
arising from such data loss, which could have a material adverse effect on the
Company's results of operations.  

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

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

IBM, Sun Microsystems and Ingram accounted for 15%, 11%, and 13% respectively, 
of Exabyte's sales in 1998, accounting for an aggregate of 39% of sales. None 
of Exabyte's customers is required to purchase a minimum quantity of the 
Company's products, and any customer may cancel or reschedule orders without 
significant penalty.  The loss of one or more of these key customers or 
substantial cancellations by Exabyte's 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


<PAGE> 21
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.

Furthermore, many of the Company's customers and end-users of Exabyte products 
are currently completing testing of their existing business products (including 
the Company's products) for Year 2000 compliance.  Because of the nature of the 
Year 2000 problem, as well as the complexity and costs associated with such 
testing procedures, it is possible that some of these customers and/or end-
users will not purchase additional products (including the Company's products)
following the completion of their Year 2000 testing until after the fourth 
quarter of 1999.  Should this occur, Exabyte may experience a substantial 
shortfall in the sale of its products during the latter part of 1999, which 
could have a material adverse effect 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. 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 Exabyte 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 Exabyte's 


<PAGE> 22
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 the Mammoth line of
tape drives is produced by Exabyte 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 these tape drives will not infringe the 
proprietary rights of third parties.

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.
Exabyte's operating results have in the past and may again in the future fall 
short of analyst or investor expectations.  Any such shortfall could have an 
immediate and significant impact on the market price of the Company's common 
stock.  In addition, should any future business volatility result in a 
protracted period of financial under-performance, generally accepted accounting
principles would require that some or all of the Company's deferred tax assets,
totally $36,945,000 at January 2, 1999, be written off.  Any such action could 
have a material adverse 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.

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's incurring a special charge or inventory 
write-down, or establishing a reserve, any of which would have a material 
adverse effect on its results of operations.  The Company has incurred special
charges and/or inventory write-downs in the past 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.

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

The Company's quarterly results can fluctuate substantially from quarter to 
quarter for various reasons.  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.


<PAGE> 23
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 third party 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, Singapore, Indonesia 
or Malaysia, the Company's results of operations may be materially affected 
by fluctuations in currency exchange rates or Europe's conversion to the euro.
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.
Additional contractual arrangements may be made, subjecting Exabyte to 
additional foreign exchange rate risks. The Company's international involvement
is also subject to certain other risks common to foreign operations, including 
government regulation, import restrictions or economic instability.  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 30% of sales in 1998, 
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 

<PAGE> 24
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. 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 applicable 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.

Market Risk
-----------

In the ordinary course of its operations, the Company is exposed to certain 
market risks, primarily changes in foreign currency exchange rates and interest
rates.  Uncertainties that are either nonfinancial or nonquantifiable, such as 
political, economic, tax, other regulatory or credit risks are not included in 
the following assessment of the Company's market risks.

Foreign Currency Exchange Rates:
The Company has foreign subsidiaries whose operations expose the Company to 
foreign currency exchange rate changes  (See Note 1 of Notes to Consolidated 
Financial Statements).  Changes could impact translations of foreign 
denominated assets and liabilities into U.S. dollars and future earnings 
and cash flows from transactions denominated in different currencies.  At 
January 2, 1999, 6% of the Company's total assets were denominated in foreign 
currencies.  During 1998, 1% of sales and 13% of operating expenses were 
denominated in foreign currencies.  The Company's exposure to currency exchange 
rate changes is diversified due to the number of different countries in which 
it conducts business.  The Company has subsidiaries in Germany, the 
Netherlands, Japan, Singapore and Canada whose functional currencies are their 
local currency.  Foreign currency gains and losses will continue to result 
from fluctuations in the exchange rates of these subsidiaries' operations 
compared to the U.S. dollar thereby impacting future operating results.
The Company enters into foreign currency forward contracts in anticipation of 
movements in the dollar/yen exchange rate to hedge the purchase of certain 
inventory components from Japanese manufacturers (See Note 1 of Notes to 
Consolidated Financial Statements).  Contracts are established with a maturity 
date within six months of the purchase date.  To be considered a hedge, 
contracts must be established for future purchases denominated in yen.  In 
circumstances where the timing of hedged purchases is deferred, the contract 
maturity dates are extended to cover the deferred payment.  At January 2, 1999,
there were no contracts outstanding.

The Company prepared sensitivity analyses of its exposures from foreign assets 
and foreign exchange forward contracts as of January 2, 1999, and of exposure 
from anticipated foreign revenue in 1999 to assess the impact of hypothetical 
changes in foreign currency exchange rates.  Based upon the results of these 
analyses, a material adverse effect on the Company's results of operations, 
cash flows or financial condition for the next year due to a 10% adverse change
in foreign currency exchange rates from the 1998 year end rates is unlikely.


<PAGE> 25
Interest Rates:  
At January 2, 1999, investments, including cash equivalents, consist of held-
to-maturity debt securities with maturity dates of six months or less (see 
Note 1 of Notes to Consolidated Financial Statements).  Changes in interest 
rates could impact the Company's anticipated interest income. The Company 
prepared sensitivity analyses of its interest rate exposures to assess the 
impact of hypothetical changes in interest rates.  Based on the results of 
these analyses, a 10% adverse change in interest rates from the 1998 year 
end rates would not have a material adverse effect on the Company's results 
of operations, cash flows or financial condition for the next year.

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 
nominations;(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 12 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 diversion 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> 26
EXECUTIVE OFFICERS OF THE COMPANY
=================================

The executive officers of the Company and their ages as of April 1, 1999, are 
as follows:

William L. Marriner    46     Chairman of the Board
                              President and Chief Executive Officer
Stephen F. Smith       49     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 December
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. Stephen F. Smith joined the Company in June 1989 as Exabyte's General 
Counsel, and currently holds this position.  Mr. Smith was appointed 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 Storage Technology Corporation 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> 27
Item 2.
PROPERTIES

The Company's corporate offices, including the offices of its divisions, as 
well as the Company's research and development, and manufacturing facilities 
are located in Boulder, Colorado, in leased buildings aggregating approximately
470,000 square feet.  The lease terms on these facilities expire on various 
dates ranging from October 1999 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
                                                Falkirk, Scotland
   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
                        Atlanta, GA             Gwynedd, United Kingdom
                        Oakbrook, IL            Frankfurt, Germany
                        Annapolis, MD           Shanghai, China
                        Walpole, MA             Beijing, China 
                        St. Louis, MO           Hong Kong, China
                        Houston, TX             Singapore
                        Dallas, 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> 28
PART II
Item 5.
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

The Company's common stock has been traded in the over-the-counter market and 
has been quoted in the National Market System of the Nasdaq Stock Market
("Nasdaq")under the symbol EXBT since the Company's initial public offering on 
October 19, 1989. For the calendar quarters indicated, the following table 
shows 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>
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................................      $ 9-5/8           $ 6-7/16
Second Quarter...............................       12-3/4             6-3/4 
Third Quarter................................        8-3/8             5
Fourth Quarter...............................        9-1/16            4-1/2

1999
First Quarter (through February 22, 1999)....      $ 6-5/8           $ 5
</TABLE>

On February 22, 1999, the Company had 622 holders of record of its common 
stock.  The reported closing price of the common stock was $5.31.  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 2, 
1999, January 3, 1998, December 28, 1996, December 30, 1995 and December 31, 
1994 and with respect to the consolidated balance sheets as of January 2, 1999,
January 3, 1998, December 28, 1996, December 30, 1995 and December 31, 1994 are
derived from audited consolidated financial statements.  The consolidated 
financial statements for the years ended January 2, 1999, January 3, 1998 and 
December 28, 1996 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> 29
<TABLE>
<CAPTION>
(In thousands, except per share data)                                  Fiscal Years Ended
                                                       Jan. 2,     Jan. 3,     Dec. 28,    Dec. 30,    Dec. 31, 
Consolidated Statement of Operations Data:              1999        1998        1996        1995        1994
------------------------------------------            --------    --------    --------    --------    --------
<S>                                                   <C>         <C>         <C>         <C>         <C> 
Net sales....................................         $286,505    $335,684    $362,891    $374,147    $381,844 
Cost of goods sold...........................          207,604     288,053     265,002     311,891     257,365
                                                      --------    --------    --------    --------    --------
Gross profit.................................           78,901      47,631      97,889      62,256     124,479
Operating expenses:      
     Selling, general and administrative.....           56,978      59,211      47,929      49,896      42,560
     Research and development................           29,888      40,909      38,391      36,956      33,586
     Purchased research and development(1)...               --          --          --          --       2,597
                                                      --------    --------    --------    --------    --------
Income (loss) from operations................           (7,965)    (52,489)     11,569     (24,596)     45,736
Other income (expense), net..................            1,816        (634)      1,114       1,568       2,069
                                                      --------    --------    --------    --------    --------
Income (loss) before income taxes(2).........           (6,149)    (53,123)     12,683     (23,028)     47,805
(Provision) benefit for income taxes.........            3,382      22,312      (4,058)     10,593     (15,400)
                                                      --------    --------    --------    --------    --------
Net income (loss)............................         $ (2,767)   $(30,811)   $  8,625    $(12,435)   $ 32,405
                                                      ========    ========    ========    ========    ========
Basic net income (loss) per share............         $  (0.12)   $  (1.38)   $   0.39    $  (0.57)   $   1.52
                                                      ========    ========    ========    ========    ========
Common shares used in the calculation of 
     basic net income (loss) per share(3)....           22,285      22,326      22,003      21,711      21,378
                                                      ========    ========    ========    ========    ========
Diluted net income (loss) per share..........         $  (0.12)   $  (1.38)   $   0.39    $  (0.57)   $   1.48
Common and potential common shares used               ========    ========    ========    ========    ========
     in the calculation of diluted net 
     income (loss) per share(3)..............           22,285      22,326      22,307      21,711      21,965
                                                      ========    ========    ========    ========    ========
Consolidated Balance Sheet Data:
--------------------------------
Working capital..............................         $121,529    $134,357    $150,713    $143,071    $164,624
Total assets.................................          207,836     221,346     256,126     250,336     242,765
Long-term obligations, excluding current
     portion.................................            7,461       9,049      10,441      10,109       6,883
Stockholders' equity.........................          166,272     170,796     200,013     186,366     196,907
</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.









<PAGE> 30
Quarterly Results of Operations (Unaudited)
-------------------------------------------
The following table sets forth unaudited operating results for each quarter of
fiscal 1998 and 1997.  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. 
<TABLE>
<CAPTION>
 (In thousands, except per share data)                               Quarters Ended
                                                       Jan. 2,    Oct. 3,    Jul. 4,     Apr. 4,
                                                        1999       1998       1998        1998 
                                                      -------     -------    -------    -------
<S>                                                   <C>         <C>        <C>        <C>
Net sales..............................               $63,196     $72,805    $69,754    $80,750
Cost of goods sold.....................                49,657      51,639     49,404     56,904
                                                      -------     -------    -------    -------
Gross profit...........................                13,539      21,166     20,350     23,846

Selling, general and administrative....                15,335      13,723     14,476     13,444
Research and development...............                 8,801       7,880      6,076      7,131
                                                      -------     -------    -------    -------
Income (loss) from operations..........               (10,597)       (437)      (202)     3,271
Other income (expense), net............                   633         949        430       (196)
                                                      -------     -------    -------    -------
Income (loss) before income taxes......                (9,964)        512        228      3,075
(Provision) benefit for income taxes...                 4,679        (174)       (77)    (1,046)
                                                      -------     -------    -------    -------
Net income (loss)......................               $(5,285)    $   338    $   151    $ 2,029
                                                      =======     =======    =======    =======
Basic net income (loss) per share......               $ (0.24)    $  0.02    $  0.01    $  0.09
                                                      =======     =======    =======    =======
Diluted net income (loss) per share....               $ (0.24)    $  0.02    $  0.01    $  0.09
                                                      =======     =======    =======    =======
</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.....................                78.6        70.9       70.8       70.5
                                                      -----       -----      -----      -----
Gross margin...........................                21.4        29.1       29.2       29.5

Selling, general and administrative....                24.3        18.9       20.8       16.7
Research and development...............                13.9        10.8        8.7        8.8
                                                      -----       -----      -----      -----
Income (loss) from operations..........               (16.8)       (0.6)      (0.3)       4.0
Other income (expense), net............                 1.0         1.3        0.6       (0.2)
                                                      -----       -----      -----      -----
Income (loss) before income taxes......               (15.8)        0.7        0.3        3.8
(Provision) benefit for income taxes...                 7.4        (0.2)      (0.1)      (1.3)
                                                      -----       -----      -----      -----
Net income (loss)......................                (8.4)%       0.5%       0.2%       2.5%
                                                      =====       =====      =====      =====
</TABLE>


<PAGE> 31
<TABLE>
<CAPTION>
(In thousands, except per share data)                                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 decisions to exit the desktop and low-end server
market including closure of its Eagle(RTM) division.  See Note 10 of Notes to 
Consolidated Financial Statements.  




<PAGE> 32
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 2, 1999, January 3, 1998 and December 28, 1996 as a
percentage of net sales.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                   Fiscal  Years
                                                      1998              1997              1996
                                                     -----             -----             -----
<S>                                                  <C>               <C>               <C>
Net sales...................................         100.0%            100.0%            100.0%
Cost of goods sold..........................          72.5              85.8              73.0
                                                     -----             -----             -----
Gross margin................................          27.5              14.2              27.0

Operating expenses:
  Selling, general and administrative.......          19.9              17.6              13.2
  Research and development..................          10.4              12.2              10.6
                                                     -----             -----             -----
Income (loss) from operations...............          (2.8)            (15.6)              3.2
Other income (expense), net.................           0.6              (0.2)              0.3
                                                     -----             -----             -----
Income (loss) before income taxes...........          (2.2)            (15.8)              3.5
(Provision) benefit for income taxes........           1.2               6.6              (1.1)
                                                     -----             -----             -----
Net income (loss)...........................          (1.0)%            (9.2)%             2.4%
                                                     =====             =====             =====
</TABLE>

PRODUCT MIX TABLE
<TABLE>
<CAPTION>
                                                                   Fiscal Years
                                                       1998              1997              1996
                                                      -----             -----             -----
<S>                                                   <C>               <C>               <C>
8mm drives:
  8205, 8505, 8700, Eliant(TM)820,             
  and Mammoth...............................          53.2%             59.1%             65.3%
Libraries:           
  EZ17(TM), 10h, 210, 220, 440, 480, 17D,
   18D, 230D, 690D and mirroring solutions..          19.6              18.2              14.4
Media.......................................          23.4              14.6              11.9
Service, spares and other...................           6.7               6.6               5.8
Other end-of-life drives and libraries......           1.1               6.6               6.3
Sales allowances............................          (4.0)             (5.1)             (3.7)
                                                     -----             -----             -----
                                                     100.0%            100.0%            100.0%
                                                     =====             =====             =====
</TABLE>




<PAGE> 33
CUSTOMER MIX TABLE
<TABLE>
<CAPTION>
                                                                     Fiscal Years
                                                      1998               1997               1996
                                                     -----              -----              -----
<S>                                                  <C>                <C>                <C>
OEM.........................................         46.3%              48.7%              50.6%
Reseller....................................         49.5               46.1               45.3
End-user and other..........................          4.2                5.2                4.1
                                                    -----              -----              -----
                                                    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 1998 COMPARED TO 1997
---------------------------------

The Company's net sales of $286.5 million during 1998 represent a decrease of
14.7% from net sales of $335.7 million during 1997.  In general, this decrease
is the result of decreased sales of 8205/8505 drives and Eagle (RTM) products.
Sales of 8205/8505 drives decreased to $22.9 million in 1998 from $111.5 
million in 1997.  Sales of Eagle(RTM) products, which were discontinued in 
1998, decreased to $2.1 million in 1998 from $19.6 million in 1997.  
Additionally, sales of current library products decreased to $56.1 million in 
1998 compared to $61.0 million in 1997.  These decreases were partially offset 
by increased sales of newer 8mm products and media.  Sales of newer 8mm 
products increased to $129.5 million in 1998 from $87.0 million in 1997.   
Sales of media increased to $67.1 million in 1998 compared to $49.1 million in 
1997.

The relative customer mix during 1998 shifted slightly to resellers from 
original equipment manufacturers ("OEMs") and end-users/others.  

Domestic sales represented 70.5% of net sales during 1998 compared to 68.3% in 
1997. International sales represented 29.5% of net sales in 1998 compared to 
31.7% in 1997.  

The Company's gross margin percentage for 1998 increased to 27.5% compared to 
14.2% for 1997.  Gross margin in 1997 excluding restructuring charges was 22.8%
(see Note 10 of Notes to Consolidated Financial Statements).  Gross margins 
were favorably impacted in 1998 by lower manufacturing expenses resulting from
headcount and cost reduction efforts during the latter part of 1997.  
Additionally, product margins improved due to decreased sales of lower-margin 
Eagle(RTM) products.  Margins were also favorably impacted by a stronger 
dollar/yen relationship in 1998 than in 1997.



<PAGE> 34
Selling, general and administrative expenses decreased to $57.0 million in 1998
from $59.2 million in 1997.  Excluding restructuring charges, 1997 expenses 
were $57.7 million (see Note 10 of Notes to Consolidated Financial Statements).
These expenses represent 19.9% of revenue in 1998 compared to 17.6% of revenue 
in 1997 and 17.2% of revenue in 1997 without restructuring charges.  The 
absolute dollar decrease is the result of headcount and cost reduction efforts 
during the latter part of 1997 which are offset by increased advertising 
expenditures during 1998.  The increased 1998 advertising resulted from a 
reintroduction of the Mammoth product as well as the introduction of several 
new library products.

Research and development expenditures decreased to $29.9 million and 10.4% of 
revenue for 1998 from $40.9 million and 12.2% of revenue in 1997.  Excluding 
restructuring charges (see Note 10 of Notes to Consolidated Financial 
Statements) these expenses in 1997 were $37.4 million and 11.1% of revenue.  
The decrease in both absolute dollars and as a percentage of revenue is mainly 
due to the decision to exit the desktop and low-end server market including
closure of the Eagle(RTM) division late in 1997. 
 
Other income, net, consists primarily of interest income and expense, state 
franchise taxes, foreign currency gains and losses, the translation impact of 
the Company's foreign subsidiaries' balance sheets and other miscellaneous 
items.  Other income in 1998 was $1.8 million compared to expense of $634,000 
in 1997.  The change relates mainly to foreign translation gains and losses.

The income tax benefit for 1998 was 55.0% compared to a benefit of 
42.0% 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%.  **The Company 
currently expects the 1999 effective tax rate to approximate 34%.  Management
has evaluated the available evidence about future taxable income.  Based on the
weight of available evidence, both positive and negative, management considers
it to be more likely than not that the deferred tax assets of $36.9 million at 
January 2, 1999 will be fully realized.**

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 8205 and 8505.  
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 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 


<PAGE> 35
products, (2) lower than expected manufacturing volumes, (3) increasing levels 
of Eagle(RTM) product 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. 

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. 
 
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%.

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 including 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> 36
The following table summarizes the activity in the Company's restructuring 
reserves during 1998 and 1997:
<TABLE>
<CAPTION>                                Workforce         Inventory            Asset
                                         Reduction        Write-downs        Write-downs          Total
(In thousands)                           ---------        -----------        -----------         -------
<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

Cash payments...................         (1,391)            (5,531)             (282)             (7,204)
Additional charges/
    reclassifications...........            (56)            (1,883)             (628)             (2,567)
                                         ------             ------            ------             -------
Balance, January 2, 1999........         $   --            $   374            $   90             $   464
                                         ======             ======            ======             =======

</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 cash payments took place in 1998.  Other cash 
payments in 1998 related to the settlement of Eagle(RTM) division purchase
commitments and shutdown costs as well as settlement of accrued liabilities
related to a discontinued project.

During 1998, the Company concluded negotiations with several of its former 
Eagle(RTM) division suppliers.  As a result of these successful negotiations,
previously recorded accrued liabilities of $1,875,000 were no longer required
and were reversed to income.

Also during 1998, the Company successfully sublet certain Eagle(RTM) facilities
at terms more favorable than initially estimated.  As a result, accrued 
liabilities of $628,000 were no longer required and were reversed to income.

**The Company currently expects to complete all restructuring acts during 1999
except for certain lease commitments.**

YEAR 2000 COMPLIANCE
--------------------

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

The Company itself is heavily dependent upon the proper functioning of its own 
computer or data-dependent systems, including, but not limited to, its systems 
in areas such as information, business, financial, operations, manufacturing 
and service.  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.  


<PAGE> 37
In mid-1997, Exabyte formed an internal 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 "Plan").
To date, the Company is executing according to its Plan.  An inventory of all
critical systems has been completed. Systems upgrades, that are Year 2000 
compliant, have been completed, or are planned during 1999 in response to 
normal business needs.  **The Company anticipates completing the remaining 
portions of the Plan during the first half of 1999, with testing of these 
systems being completed during the fourth quarter of 1999.** In addition, the 
Company's subsidiaries are in the process of being incorporated into the 
Company's Plan to become Year 2000 compliant.  **Exabyte anticipates that all 
subsidiaries are or will be Year 2000 compliant by the first quarter of 1999.**

There can be no assurance that the Company will be able to upgrade any or all 
of its, or its subsidiaries', major systems in accordance with the Plan or, 
once upgraded, that the systems will be Year 2000 compliant.  Should the 
Company fail to upgrade such systems in a timely manner, or should those 
upgrades fail to be Year 2000 compliant, the Company may be unable to conduct 
business or manufacture its products, which could cause a material adverse 
effect on the Company's results of operations.

The Company's suppliers (particularly sole-source and long lead-time 
suppliers) and key customers 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 them 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.  Additionally, 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 also have a material adverse effect on the Company's results of 
operations.  The Company is currently addressing the Year 2000 readiness of  
its suppliers and customers, as well as each of their respective suppliers, 
to address their Year 2000 readiness in a timely manner; however, there can 
be no assurance that any such effort will be successful.  Letters have been 
sent to critical suppliers for information to assess their readiness. **The 
Company anticipates that this effort will continue throughout 1999.**

Exabyte has incurred to date no incremental material costs associated with its 
efforts to become Year 2000 compliant, as the majority of the costs have 
occurred as a result of normal upgrade procedures.  **Furthermore, the Company
believes that future costs associated with its Year 2000 compliance effort will 
not be material.**

Currently, the Company is developing a contingency plan should the Company be
unsuccessful in its efforts to become Year 2000 compliant.  **The Company 
anticipates that its contingency plan should be finalized by the third 
quarter of 1999.** The Company could incur significant material costs related 
to its contingency plan.  Such material costs are currently unknown but may 
include costs associated with creating a buffer stock of the Company's products
or other such measures the Company feels is necessary to maintain operations 
should the Company face adverse difficulties relating to the Year 2000 problem.

**The Company believes that the tape drives and tape libraries manufactured or
produced by the Company do not use and have not used date data in order to 
meet stated functional performance characteristics.  The Company further
believes such products accurately process date data (including, but not 
limited to, calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including leap year calculations, 
<PAGE> 38
provided such products operate in accordance with the Company's published 
specifications, and further provided that all hardware, third-party software 
and firmware used in combination with the Company's products properly exchange
date data with such products.**  However, there can be no assurance that the 
Company's products will function in this manner.  Any failure of the Company's
product to perform in accordance with specifications could result in the loss 
of critical user data, resulting in claims against the Company for damages 
arising from such data loss, which could have a material adverse effect on the
Company's results of operations.  

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

NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------

In 1998, the Company adopted Statement of Financial Accounting Standards 
No. 131, "Disclosures About Segments of an Enterprise and Related 
Information" ("SFAS 131").  SFAS 131 supercedes SFAS 14, "Financial Reporting 
for Segments of a Business Enterprise", replacing the "industry segment" 
approach with the "management" approach.  The management approach designates 
the internal organization that is used by management for making operating 
decisions and assessing performance as the source of the Company's reportable
segments.  SFAS 131 also requires disclosure about products and services, 
geographic areas and major customers.  The adoption of SFAS 131 did not affect
results of operations or financial position but did affect the disclosure of 
segment information (see Note 9 of Notes to Consolidated Financial Statements).

In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133").  SFAS 133 prescribes accounting for 
changes in the fair value of derivatives.  This statement is effective for 
all fiscal quarters of all fiscal years beginning after June 15, 1999. **The 
Company is in the process of assessing the effects of application of this 
statement, and believes it will not have a material impact on the Company's 
consolidated results of operations.  Application may result in the recognition
of components of comprehensive income which are discussed in Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income".**

MARKET RISK
-----------

In the ordinary course of its operations, the Company is exposed to certain 
market risks, primarily changes in foreign currency exchange rates and interest
rates.  Uncertainties that are either nonfinancial or nonquantifiable, such as 
political, economic, tax, other regulatory or credit risks are not included in 
the following assessment of the Company's market risks.

Foreign Currency Exchange Rates:
The Company has foreign subsidiaries whose operations expose the Company to 
foreign currency exchange rate changes  (See Note 1 of Notes to Consolidated 
Financial Statements).  **Changes could impact translations of foreign 
denominated assets and liabilities into U.S. dollars and future earnings and 
cash flows from transactions denominated in different currencies.**  At 
<PAGE> 39
January 2, 1999, 6% of the Company's total assets were denominated in foreign 
currencies.  During 1998, 1% of sales and 13% of operating expenses were 
denominated in foreign currencies.  The Company's exposure to currency exchange 
rate changes is diversified due to the number of different countries in which 
it conducts business.  The Company has subsidiaries in Germany, the 
Netherlands, Japan, Singapore and Canada whose functional currencies are their 
local currency.  **Foreign currency gains and losses will continue to result 
from fluctuations in the exchange rates of these subsidiaries' operations 
compared to the U.S. dollar thereby impacting future operating results.**

The Company enters into foreign currency forward contracts in anticipation of 
movements in the dollar/yen exchange rate to hedge the purchase of certain 
inventory components from Japanese manufacturers (See Note 1 of Notes to 
Consolidated Financial Statements).  Contracts are established with a maturity 
date within six months of the purchase date.  To be considered a hedge, 
contracts must be established for future purchases denominated in yen.  In 
circumstances where the timing of hedged purchases is deferred, the contract 
maturity dates are extended to cover the deferred payment.  At January 2, 1999,
there were no contracts outstanding.

The Company prepared sensitivity analyses of its exposures from foreign assets 
and foreign exchange forward contracts as of January 2, 1999, and of exposure 
from anticipated foreign revenue in 1999 to assess the impact of hypothetical 
changes in foreign currency exchange rates.  **Based upon the results of these 
analyses, a material adverse effect on the Company's results of operations, 
cash flows or financial condition for the next year due to a 10% adverse change
in foreign currency exchange rates from the 1998 year end rates is unlikely.**

Interest Rates:  
At January 2, 1999, investments, including cash equivalents, consist of 
held-to-maturity debt securities with maturity dates of six months or less 
(see Note 1 of Notes to Consolidated Financial Statements).  **Changes in 
interest rates could impact the Company's anticipated interest income. 

The Company prepared sensitivity analyses of its interest rate exposures to 
assess the impact of hypothetical changes in interest rates.  **Based on the 
results of these analyses, a 10% adverse change in interest rates from the 1998
year end rates would not have a material adverse effect on the Company's 
results of operations, cash flows or financial condition for the next year.**

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

During 1998, the Company generated $34.5 million of cash from operating 
activities, received $948,000 from the issuance of common stock to 
Company employees, expended $2.7 million to repurchase outstanding shares of 
common stock, expended $9.4 million for capital equipment and paid $1.1 
million on long-term liabilities.  Together, these activities resulted in an
increase in the combined balance of cash and short-term investments of $22.2 
million to a year-ending balance of $70.7 million.  The Company's working 
capital decreased to $121.5 million on January 2, 1999 from $134.4 million on 
January 3, 1998.

The Company has a $7.5 million unsecured line of credit which expires May 15, 
1999, with borrowings under the line limited to 80% of eligible accounts 
receivable plus 25% of eligible inventory (limited to $3,000,000).  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 

<PAGE> 40
the Company's adherence to a set of financial covenants.  Additionally, 
payment of dividends is prohibited without prior bank approval.  **The 
Company anticipates that it will renew this line at comparable terms upon 
its expiration.** On January 2, 1999, the amount available under the line 
was $7.5 million and no borrowings were outstanding.  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 1,200,000 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 
$14.9 million during 1999.  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 1999.**


Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information concerning the Company's market risk is incorporated by reference 
from Item 7, "Management's Discussion and Analysis of Financial Condition and 
Results of Operation," under the caption, "Market Risk."




































<PAGE> 41
Item 8.                                             
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                         Page

Report of Independent Accountants...................................      42

Consolidated Balance Sheets - 
January 2, 1999 and January 3, 1998.................................      43

Consolidated Statements of Operations - for the years ended
January 2, 1999, January 3, 1998 and December 28, 1996..............      44

Consolidated Statements of Changes in Stockholders' Equity -
for the years ended January 2, 1999, January 3, 1998, 
December 28, 1996 ..................................................      45

Consolidated Statements of Cash Flows -
for the years ended January 2, 1999, January 3, 1998 and 
December 28, 1996...................................................      46-47

Notes to Consolidated Financial Statements..........................      48-63





































<PAGE> 42
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 2, 1999 and January 3,
1998, and the results of their operations and their cash flows for each of the 
three years in the period ended January 2, 1999, 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/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP


Denver, Colorado
January 20, 1999




























<PAGE> 43
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
<TABLE>
<CAPTION>
                                            January 2,                January 3,
                                              1999                      1998
                                            ---------                 ---------
<S>                                         <C>                       <C>
ASSETS
Current assets:
  Cash and cash equivalents..........      $ 56,571                  $ 47,014
  Short-term investments.............        14,145                     1,470
  Accounts receivable, net...........        38,014                    41,577
  Inventories, net...................        26,997                    44,551
  Income tax receivable..............         2,563                    15,873
  Deferred income taxes..............        14,213                    20,678
  Other current assets...............         3,129                     4,695
                                           --------                  --------
Total current assets.................       155,632                   175,858
                                           --------                  --------
Property and equipment, net..........        28,396                    35,152
Deferred income taxes................        22,732                     8,900
Other assets.........................         1,076                     1,436
                                           --------                  --------
Total long-term assets...............        52,204                    45,488
                                           --------                  --------
                                           $207,836                  $221,346
                                           ========                  ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable...................      $ 16,032                  $ 13,992
  Accrued liabilities................        14,002                    25,946
  Accrued income taxes...............         2,370                     1,044
  Current portion of long-term 
    obligations .....................         1,699                       519
                                            -------                  --------
Total current liabilities............        34,103                    41,501
Long-term obligations................         7,461                     9,049
Commitments and contingencies
    (Notes 7 and 11).................
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; 22,647 
    and 22,466 shares issued.........            23                        22
  Capital in excess of par value.....        66,693                    65,718
  Treasury stock, at cost, 455 and 
    15 shares........................        (2,742)                       (9)
  Retained earnings..................       102,298                   105,065
                                           --------                  --------
Total stockholders' equity...........       166,272                   170,796
                                           --------                  --------
                                           $207,836                  $221,346
                                           ========                  ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial 
statements.
<PAGE> 44
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                             Fiscal Years Ended
                                                 January 2,       January 3,     December 28,
                                                   1999             1998           1996
                                                  --------        --------        --------
<S>                                               <C>             <C>             <C>
Net sales............................             $286,505        $335,684        $362,891
Cost of goods sold...................              207,604         288,053         265,002
                                                  --------        --------        --------
Gross profit.........................               78,901          47,631          97,889

Operating expenses:
Selling, general and administrative..               56,978          59,211          47,929
Research and development.............               29,888          40,909          38,391
                                                  --------         -------        --------
Income (loss) from operations........               (7,965)        (52,489)         11,569

Other income (expense), net..........                1,816            (634)          1,114
                                                  --------        --------        --------
Income (loss) before income taxes....               (6,149)        (53,123)         12,683

(Provision) benefit for income taxes.                3,382          22,312          (4,058)
                                                  --------        --------        --------
Net income (loss)....................             $ (2,767)       $(30,811)       $  8,625
                                                  ========        ========        ========
Basic net income (loss) per share....             $  (0.12)       $  (1.38)       $   0.39
                                                  ========        ========        ========
Common shares used in the 
      calculation of basic net income
      (loss) per share...............               22,285          22,326          22,003
                                                  ========        ========        ========

Diluted net income (loss) per share..             $  (0.12)       $  (1.38)       $   0.39
                                                  ========        ========        ========
Common and potential common shares
     used in the calculation of 
     diluted net income (loss) per 
     share...........................               22,285          22,326          22,307
                                                  ========        ========        ========

</TABLE>

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











<PAGE> 45
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                                               Capital
                                                Common Stock          Treasury Stock          in Excess         Retained
                                              Shares    Amount      Shares      Amount       of Par Value       Earnings
                                              ------    ------      ------      -------      ------------       --------
<S>                                           <C>       <C>         <C>         <C>          <C>                <C>
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

Common stock options exercised ($.50              19                                              94
  to $9.00 per share)..................         
Common stock issued pursuant to the
  Employee Stock Purchase Plan
  ($4.68 and $5.95 per share)..........          162      1                                      853
Tax effect of disqualifying                                                                       
  dispositions of common stock.........                                                           28
Purchases of treasury stock............                             (440)        (2,733)
Net loss for the year..................                                                                           (2,767)
                                              ------    ---          ---        -------      -------            --------
Balance, January 2, 1999...............       22,647   $ 23         (455)       $(2,742)     $66,693            $102,298
                                              ======    ===          ===        =======      =======            ========

</TABLE>

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







<PAGE> 46
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
                                                                Fiscal Years Ended
                                                    -----------------------------------------
                                                    January 2,      January 3,    December 28,
                                                      1999            1998          1996
                                                    -----------    -----------    -----------
<S>                                                  <C>            <C>            <C>
Cash flows from operating activities:
     Cash received from customers............        $291,422       $350,833       $363,804
     Cash paid to suppliers and employees....        (269,301)      (359,975)      (354,209)
     Interest received.......................           2,314          2,216          2,759
     Interest paid...........................            (607)          (637)          (529)
     Income taxes paid.......................          (1,093)        (1,732)        (2,476)
     Income tax refund received..............          11,771          3,020          4,160
          Net cash provided (used) by                --------       --------       --------
            operating activities.............          34,506         (6,275)        13,509
                                                     --------       --------       --------

Cash flows from investing activities:
     (Purchase) sale of short-term 
       investments, net......................         (12,675)        19,130          8,200
     Capital expenditures....................          (9,414)       (11,810)       (19,276)
     Cash provided (used) by investing               --------       --------       -------- 
       activities............................         (22,089)         7,320        (11,076)
                                                     --------       --------       --------
Cash flows from financing activities:
     Proceeds from issuance of 
       common stock .........................             948          1,311          4,444
     Purchase of treasury stock..............          (2,733)            --             --
     Principal payments on long-term
       obligations...........................          (1,075)        (1,565)          (791)
          Net cash provided (used) by                --------       --------       --------
            financing activities.............          (2,860)          (254)         3,653
                                                     --------       --------       --------

Net increase in cash and cash 
     equivalents.............................           9,557            791          6,086
Cash and cash equivalents at beginning 
     of year.................................          47,014         46,223         40,137
                                                     --------       --------       --------
Cash and cash equivalents at end 
     of year.................................        $ 56,571       $ 47,014       $ 46,223
                                                     ========       ========       ========
</TABLE>

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








<PAGE> 47
EXABYTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
                                                                   Fiscal Years Ended	
                                                       -------------------------------------------
                                                        January 2,     January 3,      December 28,
                                                          1999           1998            1996
                                                       -----------    -----------      -----------
<S>                                                     <C>            <C>             <C>
Reconciliation of net income (loss) to net
  cash provided (used) by operating activities:
     Net income (loss)............................      $(2,767)       $(30,811)       $ 8,625
     Adjustments to reconcile net income (loss)
       to net cash provided by operating
       activities:
          Depreciation, amortization               
            and other.............................       16,619           19,742        17,059
          Write-down of assets....................        1,961            6,054            --
          Deferred income tax provision 
            (benefit).............................       (7,367)          (5,351)        1,071
          Provision for losses and reserves
            on accounts receivable................        8,521           14,486        11,159
          Provision for inventory write-downs.....           --           15,236            --
          Stock compensation expense..............           --              119            --

     Change in assets and liabilities:
          Accounts receivable.....................       (4,958)             351       (10,788)
          Inventories, net........................       17,554           (4,022)      (11,596)
          Income tax receivable...................       13,310          (15,873)           --
          Other current assets....................        1,566           (1,484)        6,235
          Other assets............................          (43)            (171)       (1,770)
          Accounts payable........................        2,040           (4,923)       (2,924)
          Accrued liabilities.....................      (11,944)           1,028        (2,100)
          Accrued income taxes....................        1,353              201        (2,517)
          Other long-term obligations.............       (1,339)            (857)        1,055
                                                        -------        ---------       -------
          Net cash provided (used) by
            operating activities..................      $34,506        $  (6,275)      $13,509
                                                        =======        =========       =======

Supplemental schedule of non-cash
  investing and financing activities:
     Note payable issued to purchase machinery
       and equipment or software licenses.........      $ 1,102        $     626       $   --
     Income tax benefit of disqualifying 
       dispositions of common stock...............           28              164          578
     Capital lease obligations....................          904              137           --
 
</TABLE>

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





<PAGE> 48

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.  Exabyte designs, manufactures and markets a 
full range of 8mm tape drives as well as 8mm and DLTtape(TM) robotic tape 
libraries.  Exabyte also provides its own brand of recording media, software
utilities and worldwide service and customer support.  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.  There were 52 weeks in 1998 and
1996.  There were 53 weeks in 1997.

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.  At January 2, 1999 there
were no contracts outstanding. The Company had outstanding contracts totaling 
$16,663,000 at January 3, 1998. Contracts are established with a maturity date 
within six months of the purchase date.  Hedged inventory transactions are 
included in the Statement of Cash Flows as operating activities.  At January 3,
1998 the Company had unrealized losses on forward contracts of approximately 
$1,185,000 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> 49
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, 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.  At January 2, 1999 and January 3, 1998, one 
customer accounted for approximately 17% and 21%, respectively, of accounts 
receivable.  At January 2, 1999, two other customers accounted for 
approximately 16% each of accounts receivable.  No other customers accounted
for 10% or more of accounts receivable at year end for the two years presented.
Accounts receivable are summarized as follows:

<TABLE>
<CAPTION>
                                                      January 2,     January 3,
                                                        1999           1998
                                                     -----------    -----------
                                                          (In thousands)
<S>                                                   <C>             <C>
Accounts receivable..........................         $45,844         $49,323
Less: reserves and allowance for 
  non-collection.............................          (7,830)         (7,746)
                                                      -------         -------
                                                      $38,014         $41,577
                                                      =======         =======
</TABLE>

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 $45,136,000 and $35,246,000 at January 2, 1999 and January 3, 1998, 
respectively.

The Company invests in held-to-maturity debt securities which are recorded at 
amortized cost.  At January 2, 1999 these investments had maturity dates of six 
months or less.  There were no unrealized gains or losses on such investments 
for the three years then ended.

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, net of $8,426,000 and $18,868,000 in total reserves for
1998 and 1997, respectively, consist of the following:

<PAGE> 50
<TABLE>
<CAPTION>
                                                     January 2,       January 3,
                                                       1999             1998
                                                     ----------       ---------
                                                           (In thousands)
<S>                                                   <C>             <C>
Raw materials and component parts............         $16,851         $29,266
Work-in-process..............................           1,931           2,447
Finished goods...............................           8,215          12,838
                                                      -------         -------
                                                      $26,997         $44,551
                                                      =======         =======
</TABLE>

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.

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 $37,000 and $440,000 at 
January 2, 1999 and January 3, 1998, 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 1998 or prior to 1997.  During 1998, certain capitalized software
development efforts were determined to be impaired, and $403,000 in costs
were written off.  In conjunction with the Company's restructuring in 1997,
certain capitalized software development efforts were canceled and costs 
capitalized through that date were written off (See Note 10).  All other 
research and development costs are expensed as incurred.

Net Income (Loss) Per Share

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

<PAGE> 51
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)

                                       1998          1997          1996
                                       ----          ----          ----
<S>                                    <C>           <C>           <C>
Basic EPS computation:
    Net income (loss)............      $(2,767)      $(30,811)     $8,625
                                       =======       ========      ======
    Common shares outstanding....       22,285         22,326      22,003
                                       =======       ========      ======
    Basic EPS....................      $ (0.12)      $  (1.38)     $ 0.39
                                       =======       ========      ======
Diluted EPS computation:
    Net income (loss)............      $(2,767)      $(30,811)     $8,625
                                       =======       ========      ======
    Shares:
      Common shares outstanding..       22,285         22,326      22,003
      Dilutive stock options.....           --            --          304
                                       -------       --------      ------
                                        22,285         22,326      22,307
                                       =======       ========      ======
    Diluted EPS..................      $ (0.12)      $  (1.38)     $ 0.39
                                       =======       ========      ======
</TABLE>

Options to purchase 2,742,000, 3,204,000 and 2,317,000 shares of common stock
were excluded from dilutive stock option calculations for 1998, 1997 and 1996,
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 1998 and 1997, options to purchase 1,102,000 and 494,000 
shares of common stock, respectively, were excluded from the diluted 
computation above because of their antidilutive effect on net loss per share.
Inclusion of these shares would have resulted in additional dilutive stock 
options outstanding of 117,000 and 97,000, respectively.

Since January 2, 1999, the Company has issued 1,149,000 stock options which 
could have a dilutive effect on diluted net income per common share.

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.





<PAGE> 52
New Accounting Pronouncements

In 1998, the Company adopted Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related 
Information" ("SFAS 131").  SFAS 131 supercedes SFAS 14, "Financial Reporting
for Segments of a Business Enterprise," replacing the "industry segment" 
approach with the "management" approach.  The management approach designates
the internal organization that is used by management for making operating 
decisions and assessing performance as the source of the Company's reportable
segments.  SFAS 131 also requires disclosure about products and services, 
geographic areas and major customers.  The adoption of SFAS 131 did not affect
results of operations or financial position but did affect the disclosure of 
segment information (see Note 9).

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133").  SFAS 133 prescribes 
accounting for changes in the fair value of derivatives.  This statement
is effective for all fiscal quarters of all fiscal years beginning after
June 15, 1999.  The Company is in the process of assessing the effects of 
application of this statement, and believes it will not have a material impact
on the Company's consolidated results of operations.  Application may result  
in the recognition of components of comprehensive income which are discussed
in Statement of Financial Accounting Standards No. 130, "Reporting 
Comprehensive Income".

Reclassifications

Certain reclassifications have been made to historical information to 
correspond to the 1998 financial statement presentation.

NOTE 2--PROPERTY AND EQUIPMENT

Property and equipment consist of the following:
<TABLE>
<CAPTION>
                                                   January 2,      January 3,
                                                     1999            1998
                                                  -----------     -----------
                                                          (In thousands)
<S>                                                 <C>             <C>
Equipment and furniture......................       $96,692         $90,711
Assets under capital leases..................         6,124           5,222
Leasehold improvements.......................        16,507          17,586
Less: accumulated depreciation and
  amortization...............................       (90,927)        (78,367)
                                                    -------         -------
                                                    $28,396         $35,152
                                                    =======         =======
</TABLE>

Depreciation expense was $16,619,000, $19,503,000 and $17,058,000 in 1998, 1997 
and 1996, 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).




<PAGE> 53
NOTE 3--ACCRUED LIABILITIES

Accrued liabilities consist of the following:
<TABLE>
<CAPTION>
                                                   January 2,       January 3,
                                                     1999             1998
                                                  ----------       ----------
                                                          (In thousands)
<S>                                                 <C>              <C>

Wages and employee benefits..................       $ 6,047          $ 7,943
Warranty and related costs, current portion..         4,650            5,370
Purchase commitments.........................            --            4,528
Other........................................         3,305            8,105
                                                    -------          -------
                                                    $14,002          $25,946
                                                    =======          =======
</TABLE>

NOTE 4--DEBT

Line of Credit
 
As of January 2, 1999, 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. The 
agreement is currently scheduled to expire in May 1999.  

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 1,200,000 and decreases by DM 100,000 in 
August of each year until it is fully depleted.

Long-Term Obligations

In 1998, the Company entered into a note payable for $1,102,000 to finance
the purchase of certain equipment.  The note payable requires monthly 
installments of interest (7.7%) and principal through January 2001.  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 2, 1999:










<PAGE> 54
<TABLE>
<CAPTION>
                                                      Capital Lease
                                      Note Payable     Obligations      Total
                                      ------------    -------------     -----
                                                     (In thousands)
<S>                                       <C>            <C>            <C>
     1999............................     $411           $1,014         $1,425
     2000............................      410            1,040          1,450
     2001............................       34              805            839
     2002............................       --              661            661
     2003............................       --              657            657
     Thereafter......................       --              329            329
                                          ----           ------         ------
                                           855            4,506          5,361 
Less: amount representing interest...      (68)            (920)          (988)
                                          ----           ------         ------
Present value of payments............      787            3,586          4,373
Less: current portion................     (362)            (709)        (1,071)
                                          ----           ------         ------
                                          $425           $2,877         $3,302
                                          ====           ======         ======
</TABLE>
Also included as current and long-term obligations in the accompanying balance
sheet for 1998 and 1997 are $4,787,000 and $6,126,000, respectively, which 
represent long-term warranty obligations and deferred revenue on extended 
warranty contracts.  Interest expense aggregated $607,000, $637,000 and 
$530,000 in 1998, 1997 and 1996, respectively.

NOTE 5--CAPITAL STOCK AND STOCK COMPENSATION PLANS

At January 2, 1999, 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 options
granted at fair market value under 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)               1998         1997         1996
                                                    ----         ----         ----
<S>                                                 <C>          <C>          <C>
Net income (loss):
    As reported......................               $(2,767)     $(30,811)    $8,625
    Pro forma........................               $(5,929)     $(34,953)    $4,798
Basic net income (loss) per share:
    As reported......................               $ (0.12)       $(1.38)    $ 0.39
    Pro forma........................               $ (0.27)       $(1.57)    $ 0.22
Diluted net income (loss) per share:
    As reported......................               $ (0.12)       $(1.38)    $ 0.39
    Pro forma........................               $ (0.27)       $(1.57)    $ 0.22

</TABLE>


<PAGE> 55
Fixed Stock Option Plans

Under the Incentive Stock 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 two 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, or 
they are canceled.  Under the 1997 Non-Officer Stock Option Plan, vesting for 
certain of these options may accelerate upon the optionee achieving 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>
                                                  1998               1997               1996
                                                  ----               ----               ----
<S>                                               <C>                <C>                <C>
Estimated dividends...................            none               none               none
Expected volatility...................            57%                55%                57%
Risk-free interest rate...............            4.4%-5.9%          5.6%-6.9%          5.0%-6.3%
Expected life from vest date (years)..            0.29               0.29               0.41

</TABLE>

A summary of the status of the Company's fixed stock option plans as of 
January 2, 1999, January 3, 1998 and December 28, 1996, and changes during the
years then ended is presented as follows:

<TABLE>
<CAPTION>
                                         1998                       1997                       1996
                               -----------------------    -----------------------    -----------------------
                               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..................   3,698       $15.98         3,618       $16.71         3,148       $16.97
Granted.....................   1,326         7.09         1,190        12.51         1,044        15.49
Exercised...................     (19)        5.07          (143)        1.65          (257)       13.02
Forfeited...................  (1,161)       14.82          (967)       16.58          (317)       18.19
                               -----       ------         -----       ------         -----       ------
Outstanding at end of year..   3,844       $13.32         3,698       $15.98         3,618       $16.71
                               =====       ======         =====       ======         =====       ======
Options exercisable
  at year-end...............   2,215       $15.97         2,103       $17.63         1,940       $17.60
Weighted-average fair value
  of options granted during
  the year..................               $ 2.86                     $ 4.91                     $ 6.50
</TABLE>


<PAGE> 56
The following table summarizes information about fixed stock options 
outstanding at January 2, 1999:
<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>
$ 1.00- 6.81           953        9.1 years          $ 6.74             183            $ 6.72
  6.88-12.38           838        7.7 years           10.40             355             10.47
 12.63-15.88         1,083        6.5 years           14.22             786             14.17
 16.13-35.63           970        4.4 years           21.32             891             21.64
                     -----        ---------          ------           -----            ------
                     3,844        6.9 years          $13.32           2,215            $15.97
                     =====        =========          ======           =====            ======
</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 162,000, 139,000
and 100,000 shares in 1998, 1997 and 1996, 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>                                         1998            1997            1996
                                                  ----            ----            ----
<S>                                               <C>             <C>             <C>
Estimated dividends..................             none            none            none
Expected volatility..................             57%             55%             57%
Risk-free interest rate..............             4.7-5.4%        5.3%-5.6%       5.0%-5.5%
Expected life (years)................             0.5             0.5             0.5
Weighted-average fair value of 
  purchase rights granted............             $2.34           $4.14           $4.01

</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> 57
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:
<TABLE>
<CAPTION>
                        1998          1997         1996
                      --------      --------     --------
                                 (In thousands)
<S>                   <C>          <C>          <C>
Domestic..........    $(5,374)     $(50,899)    $ 14,666
Foreign...........       (775)       (2,224)      (1,983)
                      --------     --------     --------
                      $(6,149)     $(53,123)    $ 12,683
                      ========     ========     ========
</TABLE>
















<PAGE> 58
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
                        1998          1997         1996
                      --------      --------     --------
                                 (In thousands)
<S>                     <C>         <C>           <C>
Current:
  Federal.........      $ 2,443     $(15,607)     $1,739
  State...........        1,428       (1,535)        176
  Foreign.........          114          182       1,072
Deferred:
  Federal.........       (6,180)      (4,988)      2,927
  State...........       (1,187)        (364)        319
  Foreign.........          --           --       (2,175)
                        -------     --------      ------
                        $(3,382)    $(22,312)     $4,058
                        =======     ========      ======
</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>
                                   1998          1997         1996
                                 --------      --------     --------
                                           (In thousands)
<S>                              <C>           <C>          <C>
U.S. federal income tax
  at statutory rate..........    $(2,152)      $(18,593)    $4,438
State income taxes, net
  of federal benefit.........        (63)        (1,362)       436
Research and development
  credits....................     (1,500)        (1,500)      (304)
Tax exempt interest..........       (397)          (465)      (666)
Foreign sales corporation....        (88)            --       (105)
Prior year filing effects....        364         (1,210)        --
Foreign taxes in excess
  of 35%.....................        376            904        381
Other........................         78            (86)      (122)
                                 -------       --------     ------
                                 $(3,382)      $(22,312)    $4,058
                                 =======       ========     ======
</TABLE>













<PAGE> 59
Deferred tax assets are attributable to the following:
<TABLE>
<CAPTION>
                                                 January 2,       January 3,
                                                   1999             1998
                                                -----------      -----------
                                                        (In thousands)
<S>                                              <C>              <C>
Warranty reserves...........................     $ 2,507          $ 5,358
Property and equipment......................       4,939            2,895
Net operating loss carryforwards:
   Domestic.................................      13,925            2,109
   Foreign..................................       2,175            2,175
Credit carryforwards........................       5,152            2,096
Bad debt and revenue reserves...............       2,634            2,667
Goodwill....................................       1,017            1,131
Inventory reserves..........................       2,931            6,991
Other.......................................       1,665            4,156
                                                 -------          -------
                                                 $36,945          $29,578
                                                 =======          =======
</TABLE> 

At January 2, 1999, domestic net operating loss carryforwards of $36,373,000 
are available to offset future taxable income.  Utilization of $6,695,000 of 
the carryforwards is 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 
$4,576,000 which expire between 2009 and 2018 and alternative minimum tax 
credits of $576,000 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.  The
Company has sublet certain of these leased spaces to third parties.

Future minimum lease payments under non-cancelable operating lease arrangements
are as follows:
<TABLE>
<CAPTION>

                                                         Gross Amount       Sublease       Net Amount
                                                         ------------       --------       ----------
                                                                         (In thousands)
     <S>                                                 <C>                <C>            <C>
     1999...................................             $ 6,259            $  625         $ 5,634
     2000...................................               5,250               624           4,626
     2001...................................               4,659                86           4,573
     2002...................................               3,734                10           3,724
     2003...................................               2,475                --           2,475
     Thereafter.............................               1,844                --           1,844
                                                         -------           -------         -------
                                                         $24,221            $1,345         $22,876
                                                         =======           =======         =======
</TABLE>
<PAGE> 60
Rent expense aggregated $5,871,000, $5,971,000 and $5,906,000 in 1998, 1997 
and 1996, respectively.

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 $917,000, $920,000 and 
$801,000 in 1998, 1997 and 1996, respectively.  Company contributions are 
fully vested after six years of employment.

NOTE 9-SEGMENT INFORMATION

In 1998, the Company adopted Statement of Financial Accounting Standards 
No. 131 "Disclosures About Segments of an Enterprise and Related Information"
("SFAS 131").  The Company is organized on a divisional basis by product 
line. The Company's segments are determined by these product lines which are 
engineered, manufactured and marketed by each group.  Segments include 
8mm drives and media, libraries and service.  Certain costs including 
administrative, sales, technical support and corporate marketing are not 
allocated to the segments and are considered corporate costs.  During the 
periods presented below, service segment results of operations include a 
cross-charge to the other reported segments for actual in-warranty repairs.

The 8mm drive segment engineers, manufactures and markets 8mm technology tape
drives.  They also market 8mm and other media.  The library segment engineers,
manufactures and markets 8mm and DLTtape(TM) automated tape libraries and 
solutions.  The service segment provides repair services on drives and 
libraries which can be both in and out of warranty.

The Company has restated prior years' segment data where it was practicable to
do so.  A segmented internal reporting structure was adopted by the Company in 
July of 1997.  Accordingly, only six months of data is presented for 1997.  
Prior to this, the Company had only one reportable segment. 

The Company evaluates the performance of its segments and allocates resources 
to them based on pre-tax income.  The accounting policies of the segments are 
the same as those described in Note 1.  All revenues reported herein represent
revenue from external customers and there are no intersegment revenues.

The table below presents information about segments as of and for the 
respective fiscal periods:
















<PAGE> 61
<TABLE>
<CAPTION>

                           8mm 
                           Drives       
                           and                                           Reconciling   Consolidated
                           Media      Libraries   Service      Other       Items         Totals
                           --------   ---------   --------   ---------   -----------   -------------
(In thousands)
<S>                        <C>        <C>          <C>        <C>          <C>           <C>
YEAR ENDED 1/2/99
Revenues.................  $216,068   $56,780      $22,291    $ 1,189      $(9,823)(a)   $286,505
Pre-tax results..........    48,681     2,722        1,820        734      (56,724)(b)     (2,767)
Inventory................    16,217     8,526        2,139        115           --         26,997
Depreciation/amortization
  expense included in 
  pre-tax results........     5,387     1,035        1,179         --        9,018 (c)     16,619

SIX MONTHS ENDED 1/3/98
Revenues.................   113,671    26,670       11,372      9,598       (8,195)(a)    153,115
Pre-tax results..........    12,006    (2,494)      (3,301)   (28,190)     (34,285)(b)    (56,264)
Inventory................    29,696    10,517        3,161      1,177           --         44,551
Depreciation/amortization
  expense included in 
  pre-tax results........     2,787       498          712      1,341        4,418 (c)      9,756
</TABLE>

(a)  Unallocated reserves for corporate programs
(b)  Pretax results in corporate departments
(c)  Depreciation in corporate departments

Total assets by segment are not reported since this information is not readily 
available and it is not practicable to obtain.

The following table details sales and long-lived-asset information by 
geographic area as of and for the respective fiscal years:
<TABLE>
<CAPTION>
                                           Sales                     Long-lived assets
                              -------------------------------    -------------------------
                                 1998      1997      1996          1998     1997     1996
                               --------  --------  --------      -------  -------  -------
                                      (In thousands)                   (In thousands)
<S>                            <C>       <C>       <C>           <C>      <C>      <C> 

United States...............   $201,973  $229,200  $255,324      $22,021  $26,308  $37,857
Europe/Middle East..........     63,797    74,695    79,341        6,878    9,528   11,458
Pacific Rim.................     17,020    25,085    22,078          430      522      371
Other.......................      3,715     6,704     6,148          143      230       --
                               --------  --------  --------      -------  -------  -------
                               $286,505  $335,684  $362,891      $29,472  $36,588  $49,686
                               ========  ========  ========      =======  =======  =======
</TABLE>
Foreign revenue is based on the country in which the customer is located.





<PAGE> 62
During the fiscal years ended January 2, 1999, January 3, 1998 and December 28,
1996, one customer accounted for approximately 15%, 17% and 15%, respectively,
of sales.  Another customer accounted for approximately 11%, 13% and 11% of 
sales during the same periods.  A third customer accounted for approximately 
13% of sales during fiscal 1998.  No other customers accounted for 10% or more
of sales in any of the three years presented.  Two of these customers purchase
from all reported segments.  The other customer purchases primarily from the 
8mm drives segment and the library segment.

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 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.

The Company incurred $3,123,000 in workforce reduction costs, including 
severance, outplacement and benefits.  The workforce reductions were 
concluded by the second quarter of 1998 and resulted 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.  

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 cash payments took place in 1998.  Other cash 
payments in 1998 related to the settlement of Eagle(RTM) division purchase
commitments and shutdown costs as well as settlement of accrued liabilities
related to a discontinued project.

During 1998, the Company concluded negotiations with several of its former 
Eagle(RTM) division suppliers.  As a result of these successful negotiations
previously recorded accrued liabilities of $1,875,000 were no longer required
and were reversed to income.

Also during 1998, the Company successfully sublet certain Eagle(RTM) facilities
at terms more favorable than initially estimated.  As a result, accrued 
liabilities of $628,000 were no longer required and were reversed to income.

At January 2, 1999, the remaining accruals associated with this restructuring 
were $464,000.  The Company currently expects to complete all restructuring 
acts during 1999 except for certain lease commitments.

The following table summarizes the activity in the Company's restructuring 
reserves during 1998 and 1997:






<PAGE> 63
<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

Cash payments...................         (1,391)            (5,531)             (282)            (7,204)
Additional charges/
    reclassifications...........            (56)            (1,883)             (628)            (2,567)
                                         ------            -------            ------            -------
Balance, January 2, 1999                 $   --            $   374            $   90            $   464
                                         ======            =======            ======            =======
</TABLE>


NOTE 11 - CONTINGENCIES

The Company is, from time to time, subjected to certain claims, assertions or
litigation by outside parties as part of its ongoing business operations.  The 
outcomes of any such contingencies are not expected to have a material adverse
impact on the financial condition or results of the operations of the Company.

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

     None reported.
























<PAGE> 64
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 1999 Annual 
Meeting of Stockholders to be filed within 120 days after January 2, 1999, 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 with Section 
16(a) of the Securities Exchange Act of 1934" 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> 65
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 2, 1999, January 3, 1998 
and for each of the three fiscal years in the period ended January 2, 1999.


                                                                     Page
                                                                     -----
Report of Independent Accountants...............................      42

Consolidated Balance Sheets.....................................      43

Consolidated Statements of Operations...........................      44

Consolidated Statements of Changes in Stockholders' Equity......      45

Consolidated Statements of Cash Flows...........................      46-47

Notes to Consolidated Financial Statements......................      48-63

(a)2.   Financial Statement Schedules

Schedules-Years ended January 2, 1999, January 3, 1998 and December 28, 1996.

  II      Valuation and Qualifying Accounts and Reserves........      68

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.






















<PAGE> 66
(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.
      **10.1       Incentive Stock Plan, as amended and restated on 
                   January 16, 1997. (9)
      **10.2       Stock Option Agreement used in connection with the 
                   Incentive Stock Plan. (12)
      **10.3       1990 Employee Stock Purchase Plan. (8)
      **10.4       Employee Stock Purchase Plan Offering used in connection 
                   with the 1990 Employee Stock Purchase Plan. (8)
      **10.5       Form of participation agreement used in connection with the 
                   1990 Employee Stock Purchase Plan. (3)
      **10.6       1997 Non-officer Stock Option Plan, as adopted by the Board
                   of Directors on December 23, 1997. (11)
      **10.7       Stock Option Agreement used in connection with the 1997 Non-
                   Officer Stock Option Plan. (11)
        10.8       Agreement for the sale and transfer of all shares in Grundig 
                   Data Scanner GmbH dated September 13, 1994. (5)
        10.9       Form of Indemnity Agreement entered into by the Company 
                   with each director and executive officer of the Company. (7)
      **10.10      1999 Officer Bonus Plan.
        10.11      Rights Agreement, dated January 24, 1991, between the 
                   Company and The First National Bank of Boston, as Rights 
                   Agent. (2)
        10.12      Amendment to the Rights Agreement, dated August 4, 1995, 
                   between the Company and The First National Bank of Boston 
                   as Rights Agent. (6)
        10.13      Vail/Steamboat 8mm Mechanical Components Supply Agreement, 
                   dated January 1, 1992, among Sony Corporation, Nihon 
                   Exabyte Corporation and the Company. (4)
        10.14      First Amendment of Vail/Steamboat 8mm Mechanical Components
                   Supply Agreement, dated April 1, 1994. (7)
        10.15      Second Amendment of Vail/Steamboat 8mm Mechanical Components
                   Supply Agreement, dated May 1, 1998.
        10.16      8mm Mechanical Components Purchase Agreement, dated
                   December 11, 1996, among Hitachi Ltd. Electronic Sales 
                   Office, the Company and Nihon Exabyte Corporation. (10)
        21.1       List of Subsidiaries.  (10)
        23.1       Consent of PricewaterhouseCoopers 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. 








<PAGE> 67
==============                        

 (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 Quarterly Report on Form 10-Q, 
        as filed with the SEC on August 11, 1992 and incorporated herein by 
        reference.

 (5)    Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q, 
        filed with the SEC on November 14, 1994 and incorporated herein by
        reference.

 (6)    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.

 (7)    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.

 (8)    Filed as an Exhibit to the Company's Report on Form S-8 (Registration 
        No. 333-09279), as filed with the SEC on July 31, 1996 and 
        incorporated herein by reference.

 (9)    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.

(10)    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.

(11)    Filed as an Exhibit to the Company's Report on Form S-8 (Registration 
        No. 333-45853), as filed with the SEC on February 9, 1998 and 
        incorporated herein by reference.

(12)    Filed as an Exhibit to the Company's Annual Report on Form 10-K, 
        filed with the SEC on March 25, 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 2,
1999.



<PAGE> 68
EXABYTE CORPORATION AND SUBSIDIARIES
Schedule II - 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 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
                                           =======        =======       =======        ========        =======
Year Ended January 2, 1999:
  Allowance for doubtful accounts.....     $ 1,016           (713)           --             330  (1)       633
  
  Reserves for sales programs.........       6,730                        9,234          (8,767) (2)     7,197

  Inventory valuation reserves........      18,868         (1,752)           --          (8,690) (3)     8,426
                                           -------       --------       -------        --------        -------
                                           $26,614        $(2,465)      $ 9,227        $(17,120)       $16,256
                                           =======        =======       =======        ========        =======
</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> 69
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 April 1, 1999.

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,            April 1, 1999
-----------------------       President and Chief             -----------------
William L. Marriner           Executive Officer 
                              (Principal Executive 
                              Officer)



/s/ Stephen F. Smith          Vice President, Chief             April 1, 1999
-----------------------       Financial Officer, General      -----------------
Stephen F. Smith              Counsel and Secretary 
                              (Principal Financial 
                              and Accounting Officer)





<PAGE> 71
/s/ Peter D. Behrendt         Director                          April 1, 1999
-----------------------                                       -----------------
Peter D. Behrendt



/s/ Stephen C. Johnson        Director                          April 1, 1999
-----------------------                                       -----------------
Stephen C. Johnson



/s/ A. Laurence Jones         Director                          April 1, 1999
-----------------------                                       -----------------
A. Laurence Jones



/s/ Thomas E. Pardun          Director                          April 1, 1999
-----------------------                                       -----------------
Thomas E. Pardun



/s/ Mark W. Perry             Director                          April 1, 1999
-----------------------                                       -----------------
Mark W. Perry



/s/ Ralph Z. Sorenson         Director                          April 1, 1999
-----------------------                                       -----------------
Ralph Z. Sorenson