SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D. C. 20549

                                    FORM 10Q


                 QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

       For the quarter ended December 28, 1996 Commission File No.: 1-5522

                        STERLING ELECTRONICS CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           NEVADA                                         74-1261194
-------------------------------              -------------------------------
(Sate or other jurisdiction of               IRS Employer Identification No.
incorporation or organization


                  4201 Southwest Freeway, Houston, Texas 77027
               --------------------------------------------------
               (Address of principal executive office) (Zip Code)

           Registrant's area code and telephone number: (713) 627-9800

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required by Section 13 or 15(d) of the  Securities  Exchange  act of 1934 during
the preceding  twelve months (or for such shorter period that the registrant was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                 Yes    X    No
                                     ------      ------


     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the close of the period by this report.

           Class                              Outstanding at February 5, 1997
----------------------------                  -------------------------------
Common Stock, $.50 par value                            7,044.872

<PAGE>

                                      INDEX
                        STERLING ELECTRONICS CORPORATION



PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements (Unaudited)

          Condensed  consolidated  statements of financial position December 28,
          1996 and March 30, 1996

          Condensed  consolidated  statements of income - thirteen and thirty-
          nine weeks ended  December  28,  1996 and  December  30, 1995

          Condensed consolidated  statements  of cash flows - thirty-nine  weeks
          ended  December 28, 1996 and December 30, 1995

          Notes to condensed  consolidated financial statements - December 28,
          1996

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


<PAGE>
                        STERLING ELECTRONICS CORPORATION
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

                                             December 28,        March 30,
                                                1996              1996
                                         -----------------   ---------------

ASSETS

Current Assets
     Cash                                $      1,707,038    $    4,376,818
     Receivables-net of reserve
         for doubtful accounts                 46,824,817        50,083,042
     Inventory                                 66,314,540        56,759,383
     Other current assets                         817,364           645,569
                                         -----------------   ---------------
                                              115,663,759       111,864,812
Property and equipment - net of
     depreciation                               9,596,761         6,908,833
Goodwill, net of amortization                   9,213,968         4,141,322
Other assets                                    4,363,497         3,923,233
                                         -----------------   ---------------
                                            $ 138,837,985     $ 126,838,200
                                         =================   ===============


LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
     Trade accounts payable and
         accrued expenses                   $  38,400,347     $  39,378,115
     Current portion - long term
         obligations                              251,806           290,498
     Income taxes                                 854,201           805,020
                                         -----------------   ---------------
                                               39,506,354        40,473,633

Long-term obligations - net of
     amounts due within one year               41,343,009        33,719,186
Postemployment benefits and other
     non-current liabilities                    4,358,491         4,192,029

Shareholders' Equity
     Foreign currency translation adjustment         (125)             (125)
     Common stock, $.50 par value               3,695,508         3,517,211
     Additional paid-in capital                26,817,489        22,053,742
     Retained earnings                         27,336,304        24,983,760
                                         -----------------   ---------------
                                               57,849,176        50,554,588
     Less treasury stock, at cost               4,219,045         2,101,236
                                         -----------------   ---------------
                                               53,630,131        48,453,352
                                         -----------------   ---------------
                                            $ 138,837,985     $ 126,838,200
                                         =================   ===============
<PAGE>

                        STERLING ELECTRONICS CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
          THIRTEEN WEEKS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995


                                           1996                      1995
                                    -------------------       ------------------


Net sales                           $      82,180,913         $      79,347,305

Cost of sales                              64,206,044                62,296,312
                                    -------------------       ------------------

                                           17,974,869                17,050,993
Selling, administrative and
       other operating expenses            13,800,581                12,367,684
                                    -------------------       ------------------

Income from operations                      4,174,288                 4,683,309
Interest expense                              485,491                   504,371
                                    -------------------       ------------------

Income before income taxes                  3,688,797                 4,178,938
Income taxes                                1,457,000                 1,676,000
                                    -------------------       ------------------

                                     $      2,231,797       $         2,502,938
                                    ===================       ==================


Income per common share and
  common share equivalents:

Primary                              $           0.31       $             0.31
                                    ===================       ==================

Fully diluted                        $           0.31       $             0.31
                                    ===================       ==================

Number of common shares and
  common share equivalents used in
  computing per share amounts

       Primary                             7,191,593                 7,457,833
       Fully diluted                       7,199,798                 7,457,833
<PAGE>

                        STERLING ELECTRONICS CORPORATION
                        CONSOLIDATED STATEMENT OF INCOME
         THIRTY-NINE WEEKS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995


                                                  1996                1995
                                             --------------       --------------


Net sales                                    $ 241,580,695        $ 230,152,806

Cost of sales                                  187,862,921          180,775,591
                                             --------------       --------------

                                                53,717,774           49,377,215
Selling, administrative and
     other operating expenses                   40,759,320           36,047,767
                                             --------------       --------------

Income from operations                          12,958,454           13,329,448

Interest expense                                 1,403,521            1,147,323
                                             --------------       --------------

Income before income taxes                      11,554,933           12,182,125

Income taxes                                     4,592,000            4,884,000
                                             --------------       --------------

                                                 6,962,933            7,298,125

Loss from discontinued operations                   -                  (534,374)
                                             --------------       --------------

                                             $   6,962,933        $   6,763,751
                                             ==============       ==============


Income per common share and
  common share equivalents:

Primary
     Income from continuing operations       $       0.96         $        0.98
     Loss from discontinued operations                 -                  (0.07)
                                             --------------       --------------
                                                     0.96         $        0.91
                                             ==============       ==============

Fully diluted
     Income from continuing operations       $       0.96         $        0.98
     Loss from discontinued operations                 -                  (0.07)
                                             --------------       --------------
                                             $       0.96         $        0.91
                                             ==============       ==============

Number of common shares and
  common share equivalents used in
  computing per share amounts

     Primary                                     7,272,924            7,453,013
     Fully diluted                               7,275,903            7,471,850

<PAGE>

                        STERLING ELECTRONICS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         TWENTY-SIX WEEKS ENDED DECEMBER 28, 1996 AND DECEMBER 30, 1995




                                                    1996              1995
                                              --------------     -------------

OPERATING ACTIVITIES
  Net income                                     $ 6,962,933       $ 6,763,751
  Adjustments needed to reconcile
    net income to net cash provided
    by operating acitivities:
      Depreciation and amortization                1,585,371           909,971
      Provision for losses on
        accounts receivable                        1,055,010           995,515
                                               --------------   --------------
                                                   9,603,314         8,669,237
  Changes in operating assets and
    liabilities
    Decrease (increase) in accounts
      receivable                                   9,085,784       ( 5,129,003)
    Increase in inventories                       (2,045,898)      (18,748,903)
    (Increase) decrease in
      other current assets                          (104,177)          692,399
    Increase (decrease) in accounts
      payable and accrued expenses                (5,310,779)        2,222,454
    Increase in postemployment benefits
      and other non-current liabilities              166,462            12,911
                                               --------------   ---------------
        Net cash provided (used)
          by operating activities                 11,394,706       (12,280,905)
INVESTING ACTIVITIES
  Purchase of property and equipment              (2,386,536)       (2,039,210)
  Acquisition of Marsh Electronics, Inc.         (15,859,080)            -
  Acquisition of DGW Electronics Corporation             -          (5,807,745)
  (Increase)  in other assets                       (454,761)         (353,581)
                                               --------------    --------------
        Net cash (used) in investing activities  (18,700,377)       (8,200,536)

FINANCING ACTIVITIES
  Proceeds from borrowings under revolver         40,988,751        65,894,476
  Repayments of borrowings under revolver        (48,182,604)      (44,054,553)
                                               --------------    --------------
  Net increase (decrease) in revolving
    line of credit                                (7,193,853)       21,839,923
  Proceeds from long term borrowings              15,000,000             -
  Principal payments on other long term debt        (221,016)         (222,096)
  Issuance of common stock under option plans        253,253           101,517
  Purchases of treasury stock                     (3,202,493)       (1,634,250)
                                               --------------    --------------
         Net cash (used) provided by
           financing activities                   4,635,891         20,085,094
DECREASE IN CASH AND CASH EQUIVALENTS            (2,669,780)          (396,347)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR    4,376,818          3,110,397
                                               --------------    --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR        $ 1,707,038        $ 2,714,050
                                               ==============    ==============
<PAGE>

                        STERLING ELECTRONICS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                December 28, 1996


Note A - Accounting Policies

The accompanying  unaudited condensed  consolidated financial statements include
the  accounts  of  Sterling  Electronics  Corporation  (the  "Company")  and its
majority-owned  subsidiaries  after elimination of all significant  intercompany
accounts  and  transactions.  In the  opinion  of  the  Company,  the  unaudited
condensed   consolidated   financial  statements  contain  all  the  adjustments
(consisting of only normal  accruals)  necessary to present fairly the financial
position as of December 28, 1996 and the results of operations  for the thirteen
and thirty-nine weeks then ended. The results of operations for the thirteen and
thirty-nine weeks ended December 28, 1996 are not necessarily  indicative of the
results to be expected for the full year.

Note B - Long-term Debt

Long-term  debt as of December  28, 1996 and the amounts due within one year are
as follows:

                          AMOUNTS DUE           LONG TERM       MATURING IN
DESCRIPTION             WITHIN ONE YEAR          PORTION        FISCAL YEAR

Revolving credit line     $    0              $  26,000,000         1999

Senior note                    0                 15,000,000         2007

Capitalized lease
  obligations                 75,159                108,177       1996-2000

Equipment loans              176,647                234,832       1999-2001
                          ___________         ______________
                          $  251,806          $  41,343,009


On April 15, 1996 the Company  borrowed $15 million  from an  insurance  company
under a ten  year  agreement  with a fixed  interest  rate of  6.45%.  The  loan
agreement  requires   semiannual  interest  payments  with  seven  equal  annual
principal  payments of $2,143,000  commencing  on April 15, 2000.  Proceeds from
this loan were used to reduce amounts borrowed under the revolving credit line.

Note C - Acquisition of Marsh Electronics, Inc.

The Company completed the acquisition of Marsh  Electronics,  Inc.  ("Marsh") on
November 19, 1996. Marsh is a distributor of electronic parts with facilities in
Milwaukee and Appleton, Wisconsin;  Indianapolis, Indiana and Detroit, Michigan.
Marsh facilities in Chicago, Illinois and Minneapolis, Minnesota were closed and
personnel were relocated into existing  Sterling  facilities in those geographic
areas.  The  operating  results of Marsh are included  with those of the Company
from the date of the acquisition forward.  Sales of Marsh from November 19, 1996
through December 28, 1996 were approximately $5.2 million.

Note D - Common Stock Dividends

All per share  amounts  have been  retroactively  adjusted  for the five percent
common stock dividends paid to shareholders of record as of December 9, 1996 and
January 11, 1996.

<PAGE>


        MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS


Thirty-nine  weeks ended  December 28, 1996 compared to  thirty-nine  weeks
ended  December  30,  1995

Net Sales - Consolidated net sales for the current  thirty-nine week period were
5% ahead of sales for the  thirty-nine  week  period a year ago. If the sales of
Marsh  Electronics,  Inc.  ("Marsh") acquired in November 1996, and the Canadian
locations,  acquired in August 1995, are excluded from both periods, sales would
decline  1%.  Such  decrease  would be the  result  of  decreased  semiconductor
revenues partially offset by increased connector revenues.

Gross Margin - Sterling's  consolidated  gross margin for the thirty-nine  weeks
increased  to 22.2% from  21.5% for the  thirty-nine  weeks a year ago  stemming
principally  from  improved  gross margins on  semiconductor  sales and sales of
higher margin connector  products  increasing  while lower margin  semiconductor
sales declined.

Selling and Administrative Costs - Consolidated  operating expenses increased to
16.9% of sales compared to 15.7% of sales for the thirty-nine  weeks a year ago.
The majority of the dollar  increase is due to  increased  sales  personnel  and
sales support related costs - commissions, salaries, travel and fringe benefits,
including  the costs  associated  with the  recently  established  team of field
application  engineers.  The cost of operating  the four Marsh sales offices and
the Marsh  warehouse  for the six weeks since  acquisition  are  included in the
current  period.  Additionally,  the Company  operated two more sales  locations
(Portland and Huntsville) during the current thirty-nine week period compared to
a year ago and the five  locations in Canada were included for only twenty weeks
in the  thirty-nine  week period a year ago.  Various other  operating  expenses
including management information systems,  telephone and warehouse expenses also
increased.

Interest  Expense - The 22% increase in interest expense is primarily the result
of the  approximately $6 million increase from the comparable  period in average
indebtedness.

Thirteen weeks ended December 28, 1996 compared to thirteen weeks ended December
30, 1995

Net Sales - Consolidated  net sales for the current thirteen week period were 4%
ahead of sales for the  thirteen  week period a year ago. If the sales of Marsh,
acquired in November,  1996, are excluded, sales would decline 3%. Such decrease
would be the result of  decreased  semiconductor  revenues  partially  offset by
increased connector revenues.

Gross Margin -  Sterling's  consolidated  gross  margin for the  thirteen  weeks
improved  to  21.9%  from  21.5%  for the  thirteen  weeks a year  ago  stemming
principally  from  improved  gross margins on  semiconductor  sales and sales of
higher  margin  connector  products  increasing  while  sales  of  lower  margin
semiconductors declined.

Selling and Administrative Costs - Consolidated  operating expenses increased to
16.8% of sales compared to 15.6% of sales for the thirteen weeks a year ago. The
majority of the dollar  increase is due to increased  sales  personnel and sales
support  related  costs -  commissions,  salaries,  travel and fringe  benefits,
including  the costs  associated  with the  recently  established  team of field
application  engineers.  The cost of operating  the four Marsh sales offices and
the Marsh  warehouse  for the six weeks since  acquisition  are  included in the
current  period.  Additionally,  the Company  operated two more sales  locations
(Portland and Huntsville)  during the current thirteen week period compared to a
year ago.  Various other operating  expenses  including  management  information
systems, telephone and warehouse expenses also increased.

Liquidity  and Capital  Resources - Since the  beginning  of the current  fiscal
year, Sterling has reduced receivables  (excluding  receivables purchased in the
Marsh acquisition) by approximately $ 9.1 million. In November 1996, the Company
borrowed  $15.9 million under the line of credit to purchase  Marsh. A secondary
use of funds has been  capital  expenditures  of  approximately  $ 2.4  million,
principally for new computer hardware and software.  These capital  expenditures
were financed by cash flow from operations.

On April 15, 1996 the Company  borrowed $15 million at a fixed  interest rate of
6.45% from an insurance  company  under a ten year  agreement  with a seven year
average  maturity.  Proceeds from this loan were used to reduce amounts borrowed
under the bank credit line.

Working  capital  was $ 76.2  million at  December  28,  1996  compared to $71.4
million at March 30,  1996.  The  current  ratio was 2.9  compared to 2.8 at the
beginning of the year.  Working  capital  increased as a result of financing the
purchase  of Marsh  inventory  and  receivables  with  long-term  debt.  Average
annualized  inventory  turnover for the most recent thirteen week period was 4.1
down from 5.4 for all of fiscal 1996.

<PAGE>

The ratio of long-term debt to total capitalization was 44% at December 28, 1996
compared to 41% at the  beginning of the year.  At December 28, 1996 the Company
had  approximately  $ 14 million in available  credit under the $40 million bank
credit  line which  matures on  February  16,  1999.  Management  believes  that
internal  generation  of cash flow  (net  income  plus  non-cash  items  such as
depreciation and amortization),  available equipment financing,  funds available
under the bank credit line, plus possible increases in the bank credit line will
be sufficient to meet liquidity needs over the next two fiscal years.

On June 5, 1996,  the Company agreed to lease a 181,000 square foot warehouse to
be constructed  adjacent to the Dallas/Fort  Worth  International  Airport.  The
lease term is ten years with monthly rental payments of  approximately  $82,000,
plus  the  Company  is  responsible  for  all  property  taxes,   insurance  and
maintenance.  The  Company  intends to purchase  and/or  lease an  estimated  $6
million  of  material  handling  equipment,   computer  equipment  and  material
management  software for this  warehouse and  distribution  center.  The Company
intends  to  consolidate  the  distribution  operations  of its  three  existing
regional distribution centers into this new state-of-the-art facility during the
second half of fiscal  1998.  Management  believes  that the  capital  resources
described  above should be adequate to fund the cost of this  consolidation  and
the operation of the new distribution center.

<PAGE>

                                OTHER INFORMATION



Item 1 through Item 5

The Company was not required to report on Items 1 through 5.



Item 6 - Exhibits and Reports on Form 8-K

 (a)      The following exhibit is included herein
          (11) Statement re: computation of earnings per share

 (b)      Reports of Form 8-K  -
          There were no reports on Form 8-K filed  during the  thirteen  weeks
           ended December 28, 1996






                                   SIGNATURES

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

                                                STERLING ELECTRONICS CORPORATION


                                                         /s/ Mac McConnell
                                                  ______________________________
Date: February 10, 1997                            Mac McConnell, Vice-President
                                                         Chief Financial Officer

<PAGE>
                        STERLING ELECTRONICS CORPORATION
             (11) - Statement Re: COMPUTATION OF PER SHARE EARNINGS

                                                                Thirty-nine
                                   Thirteen weeks ended         weeks ended
                                   --------------------     --------------------
                                    Dec. 28,   Dec. 30,     Dec. 28,   Dec. 30,
                                     1996        1995         1996       1995
PRIMARY

Average shares outstanding      7,033,834   7,255,921     7,128,341   7,265,415
Net effect of dilutive stock
  options-based on the treasury
  stock method using average
  market price                    157,759     201,912       144,583     187,598
                               ----------  ----------    ----------  ----------
Total                           7,191,593   7,457,833     7,272,924   7,453,013

Net income applicable to
  common stock
    Income from continuing
      operations               $2,231,797  $2,502,938    $6,962,933  $7,298,125
    Income from dicontinued
       operations                     -          -            -        (534,374)
                               ----------  ----------    ----------  ----------
                               $2,231,797  $2,502,938    $6,962,933  $6,763,751
                               ==========  ==========    ==========  ==========
Per share amount
  Income from continuing
    operations                 $     0.31  $     0.34    $     0.96   $    0.98
  Income from dicontinued
    operations                          -           -             -       (0.07)
                               ----------   ---------    ----------   ---------
                               $     0.31  $     0.34    $     0.96   $    0.91
                               ==========   =========    ==========   =========


FULLY DILUTED

Average shares outstanding      7,033,104   7,255,921     7,128,340   7,256,034
Net effect of dilutive stock
  options-based on the treasury
  stock method using average
  market price                    166,694     201,912       147,563     215,816
                               ----------  ----------    ----------  ----------
Total                           7,199,798   7,457,833     7,275,903   7,471,850

Net income applicable to
  common stock
  Income from continuing
    operations                 $2,231,797  $2,502,938    $6,962,933  $7,298,125
     Income from dicontinued
    operations                     -           -              -        (534,374)
                               ----------  ----------    ----------  ----------
                               $2,231,797  $2,502,938    $6,962,933  $6,763,751
                               ==========  ==========    ==========  ==========

Per share amount
     Income from continuing
       operations              $     0.31  $     0.34    $    0.96   $     0.98
     Income from dicontinued
       operations                       -           -            -        (0.07)
                               ----------  ----------    ---------   ----------
                               $     0.31  $     0.34    $    0.96   $     0.91
                               ==========  ==========    =========   ==========