UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934    For the quarterly period ended March 31, 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 NUMBER 0-25524


                               HELLO DIRECT, INC.
             (Exact name of registrant as specified in its charter)


                   DELAWARE                            94-3043208
        (State or other jurisdiction of              (IRS Employer
          incorporation or organization)              Identification No.)



               5893 RUE FERRARI                          95138-1857
             SAN JOSE, CALIFORNIA                        (Zip Code)
   (Address of principal executive offices)


      Registrant's telephone number, including area code:  (408) 972-1990

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


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                              Outstanding at
          Class                               April 19, 1999
          -----                               -------------
Common Stock, Par Value $.001                   5,095,432
<PAGE>




HELLO DIRECT, INC.
FORM 10-Q QUARTERLY REPORT

TABLE OF CONTENTS



PART I  -  Financial Information

Item 1. -- Financial Statements 

        Condensed Balance Sheets as of March 31, 1999 and December 31, 1998

        Condensed Statements of Operations for the Three Months Ended 
        March 31, 1999 and 1998         

        Condensed Statements of Cash Flows for the Three Months Ended
        March 31, 1999 and 1998         

        Notes to Condensed Financial Statements                 

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

        Results of Operations           

        Liquidity and Capital Resources         

        Additional Factors Affecting Operating Results and Market Price 
        of Stock                



Part II - Other Information

Item 1 and Items 3 through 5 are not applicable with respect to the current 
reporting period.

Item 2. -  Changes in Securities and Use of Proceeds

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

Signatures                      


Part 1.  Financial Information
Item 1.   Financial Statements

                              HELLO DIRECT, INC.
                           CONDENSED BALANCE SHEETS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                     March 31,     December 31,
                                                       1999           1998
                                                   -------------  -------------
                                                   (unaudited)
<S>                                                <C>            <C>
                             ASSETS
Current assets:
     Cash and cash equivalents                           $6,418         $5,745
     Short-term investments                                 604          3,860
     Trade accounts receivable, less allowance for
       returns and doubtful accounts                      7,154          5,491
     Inventories                                          5,557          6,119
     Deferred tax assets                                  1,064            847
     Other current assets                                 1,298          2,474
                                                   -------------  -------------
      Total current assets                               22,095         24,536

Notes receivable                                          4,159          4,239
Property and equipment, net                               6,622          6,246
Goodwill, net                                             1,900              0
                                                   -------------  -------------
     Total assets                                       $34,776        $35,021
                                                   =============  =============

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                    $2,232         $3,567
     Accrued expenses                                     2,000          1,736
                                                   -------------  -------------
      Total current liabilities                           4,232          5,303
Non-current liabilities                                     409            364
                                                   -------------  -------------
      Total liabilities                                   4,641          5,667

Stockholders' equity:
     Common stock                                             5              5
     Additional paid-in capital                          28,641         28,319
     Retained earnings                                    2,612          1,721
     Less treasury stock, at cost                        (1,123)          (691)
                                                   -------------  -------------
      Total stockholders' equity                         30,135         29,354
                                                   -------------  -------------
      Total liabilities and stockholders' equity        $34,776        $35,021
                                                   =============  =============
</TABLE>
           See accompanying notes to condensed financial statements.
<PAGE>

                              HELLO DIRECT, INC.
                         CONDENSED STATEMENTS OF INCOME
                     (In thousands, except per share data)
                                  (unaudited)
<TABLE>
<CAPTION>
                                         Three Months Ended
                                               March 31,
                                        -------------------
                                            1999      1998
                                        --------- ---------
<S>                                     <C>       <C>
Net sales                                $19,450   $17,910
Cost of goods sold                         8,933     8,319
                                        --------- ---------
      Gross profit                        10,517     9,591

Selling, general and administrative
  expenses                                 8,649     8,210
Product development expenses                 607       579
                                        --------- ---------
      Operating income                     1,261       802
Other income, net                            224       203
                                        --------- ---------
      Income before income taxes           1,485     1,005
Income taxes                                 594       402
                                        --------- ---------
      Net income                            $891      $603
                                        ========= =========

Basic per share amounts:
  Net income                               $0.17     $0.12
                                        ========= =========
  Weighted average shares outstanding      5,158     5,087
                                        ========= =========
Diluted per share amounts:
  Net income                               $0.17     $0.12
                                        ========= =========
  Weighted average shares outstanding      5,361     5,182
                                        ========= =========
</TABLE> 
           See accompanying notes to condensed financial statements.
<PAGE>

                              HELLO DIRECT, INC.
                      CONDENSED STATEMENTS OF CASH FLOWS
                                (unaudited)
<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                   March 31,
                                                            ------------------
                                                               1999      1998
                                                            --------  --------
<S>                                                         <C>       <C>
Cash flows from operating activities:
   Net income                                                  $891      $603
   Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
        Depreciation and amortization                           576       388
        Deferred income taxes                                  (217)       77
        Deferred rent                                            45        45
        Provision for returns and doubtful accounts             (66)      (61)
        Changes in items affecting operations:                    0         0
             Trade accounts receivable                       (1,592)     (986)
             Inventories                                        562      (873)
             Other assets                                     1,177       430
             Accounts payable and accrued expenses           (1,071)     (867)
                                                            --------  --------
        Net cash provided by (used in) operating activities     305    (1,244)
                                                            --------  --------
Cash flows from investing activities:
   Purchases of property and equipment                         (852)     (339)
   Decrease (increase) in investments                         3,256    (1,369)
   Payments received on note receivable                          74        68
   Acquisition of company                                    (1,500)        0
                                                            --------  --------
        Net cash provided by (used in) investing activities     978    (1,640)
                                                            --------  --------
Cash flows from financing activities:
   Sale of common stock, net                                    278       119
   Purchase of treasury stock                                  (888)        0
                                                            --------  --------
        Net cash provided by (used in) financing activities    (610)      119
                                                            --------  --------
Net decrease in cash and cash equivalents                       673    (2,765)
Cash and cash equivalents at beginning of period              5,745     5,135
                                                            --------  --------
Cash and cash equivalents at end of period                   $6,418    $2,370
                                                            ========  ========
Non-cash financing activities:
   Issuance of treasury stock for aquisition of company        $500        $0
                                                            ========  ========
</TABLE>
           See accompanying notes to condensed financial statements.

HELLO DIRECT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS

1. Interim Financial Statements

In the opinion of the management of Hello Direct, Inc. (the "Company"), 
the accompanying unaudited financial statements include all adjustments, 
consisting only of normal recurring adjustments necessary to present 
fairly the financial information set forth therein. 

The condensed financial statements have been prepared by the Company 
without audit and are subject to year-end adjustment.  Certain 
information and footnote disclosures normally included in financial 
statements, prepared in accordance with generally accepted accounting 
principles, have been condensed or omitted pursuant to the rules and 
regulations of the Securities and Exchange Commission.  

It is suggested that these interim statements be read in conjunction 
with the audited financial statements and notes thereto included in the 
Company's annual report (Commission File Number 0-25524) filed on Form 
10-K for the fiscal year ended December 31, 1998. 

Results of operations for the three-month period ended March 31, 1999 
are not necessarily indicative of future financial results.

2. Net Income Per Share

There were no adjustments to net income for purposes of the calculation 
of diluted net income per share.  The table below reconciles basic 
weighted average shares outstanding to diluted weighted average shares 
outstanding:

                                                Three months ended
                                                     March 31,
                                                 1999       1998
                                              ---------- ----------
Basic weighted average shares outstanding      5,158,000  5,087,000

Common stock options utilizing
  treasury stock method when dilutive            203,000     95,000
                                              ---------- ----------
Diluted weighted average shares outstanding    5,361,000  5,182,000
                                              ========== ==========



3. Acquisition of PhoneZone.com, Inc.

On January 20, 1999, the Company acquired PhoneZone.com, Inc. 
("PhoneZone") a privately held company for $1.5 million in cash, 50,000 
shares of common stock valued at $0.5 million and the assumption of 
$50,000 of outstanding debt.  PhoneZone, founded in 1996 and an emerging 
authority on the convergence of Internet and telecom technologies, is an 
influential source of comparative research, analysis, and purchase 
information on telecom and networking solutions for small- and medium-
size companies.  The acquisition was accounted for using the purchase 
method of accounting and the purchase price was allocated to assets 
acquired based on their estimated fair values.  This treatment resulted 
in approximately $2.0 million of cost in excess of net assets, to be 
amortized over a five-year period. 


4. Recently Adopted Accounting Pronouncements

On January 1, 1999, the Company adopted Statement of Position 98-5, 
Reporting on the Costs of Start-Up Activities ("SOP 98-5").  SOP 98-5 
requires that costs of start-up activities be charged to expense as 
incurred and broadly defines such costs.  The Company had not deferred 
any costs as defined in SOP 98-5, and, as such, there was no charge to 
earnings for the cumulative effect of the change in accounting principle 
upon adoption.



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

This Management's Discussion and Analysis section contains forward-
looking statements that involve risks and uncertainties.  The Company's 
actual results may differ significantly from the results discussed in 
the forward-looking statements.  Factors that might cause such a 
difference include, but are not limited to, those discussed below and in 
the Company's reports filed with the Securities and Exchange Commission 
including the Company's annual report on Form 10-K for the year ended 
December 31, 1998 (the "Form 10-K"). The forward-looking statements 
contained herein are made as of the date hereof, and the Company assumes 
no obligation to update such forward-looking statements or to update 
reasons actual results could differ materially from those anticipated in 
such forward-looking statements.  Forward-looking statements are 
identified with an asterisk (*).

RESULTS OF OPERATIONS

First Quarter 1999 Compared to First Quarter 1998

Net Sales.      Net sales reflect total sales less a provision for returns.  
Net sales increased $1,540,000, or 8.6%, to $19,450,000 in the three-
month period ended March 31, 1999, from $17,910,000 for the comparable 
period in 1998. This increase was primarily attributable to an increase 
in both Internet and outbound telemarketing sales offset by a decrease 
in catalog sales.  The decrease in catalog sales resulted in part from a 
1.2% reduction in the number of catalogs distributed, to 8.2 million 
from 8.3 million.  Average order size increased 1.9% to $264 from $259.

Gross Profit.    Cost of goods sold includes merchandise cost, freight 
and duty, warranty expense, and packaging and shipping supplies.  Gross 
profit increased $926,000, or 9.7%, to $10,517,000 in the three-month 
period ended March 31, 1999, from $9,591,000 for the comparable period 
in 1998.  The gross margin percentage for the three-month period was 
54.1% for 1999 versus 53.6% for 1998.  This increase in gross margin 
reflects the continued strong performance of the Company's proprietary 
products, which carry higher gross margins.

Selling, General and Administrative Expenses.   Selling, general and 
administrative expenses increased $439,000, or 5.3%, to $8,649,000 in 
the three-month period ended March 31, 1999, from $8,210,000 for the 
comparable period in 1998.  The dollar increase was associated with 
planned headcount additions to the Company's administrative management 
and the product support groups.  However, as a percentage of net sales, 
these expenses for the three-month period declined to 44.5% in 1999, as 
compared to 45.8% for the same three-month period in 1998. A significant 
portion of the Company's selling, general and administrative expenses is 
related to the production, printing and distribution of its catalog.  
Any significant increase in the cost of paper or postage, or 
deterioration in the response rates to mailings, would have a material 
adverse effect on the Company's operating results. 

Product Development Expenses.   Product development expenses increased 
$28,000, or 4.8%, to $607,000 for the three month period ended March 31, 
1999, from $579,000 for the comparable period in 1998.  As a percentage 
of net sales, these expenses for the three-month period were 3.1% for 
1999 versus 3.2% for the same three-month period in 1998.  The increase 
in absolute dollars was due to the increased staffing of the Company's 
product development group reflecting the Company's commitment to new 
product development.  It is anticipated that these expenses will 
fluctuate from time to time based upon the number and character of the 
products under development; however, the Company believes these 
expenses, as a percentage of net sales, will increase for the year 
ending December 31, 1999 over the prior year.* 

Other Income, net.      Other income includes interest income and 
discounts of $228,000 for the three-month period ended March 31, 1999 
versus $207,000 for the comparable period in 1998.  The interest income 
relates to interest earned on cash investments, short-term investments 
and on the outstanding note receivable while discounts are earned on 
early payment for products and services.

Net Income.     Net income increased $288,000 or 47.8% to $891,000 in the 
three-month period ended March 31, 1999, from $603,000 for the 
comparable period in 1998.  This increase was due to the reasons 
discussed above.

Quarterly and Seasonal Fluctuations.  The Company has experienced in the 
past, and will experience in the future, quarterly variations in net 
sales and net income as a result of many factors, including the timing 
of catalog mailings;  catalog response rates;  product mix; the level of 
selling, general and administrative expenses; the timing and level of 
product development expenses; and the timing and success of new product 
introductions by the Company or its competitors.*  The Company's planned 
operating expenditures are based on sales forecasts.  If net sales are 
below expectations in any given quarter, operating results would be 
materially adversely affected.  Due to the foregoing factors, it is 
possible that in some future quarter the Company's operating results 
will be below the expectations of public market analysts and investors.  
In such event, the price of the Company's Common Stock would likely be 
materially adversely affected.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of liquidity have been cash flow from 
operations, proceeds from its initial public offering, venture capital 
equity and debt financing, and borrowings under its revolving bank line 
of credit.

Cash provided by operating activities during the three-month period 
ended March 31, 1999, was $305,000.  This was the result of $1,229,000 
provided by operations including net income, depreciation and 
amortization and other non-cash charges, offset by $924,000 of changes 
in operating assets and liabilities.  Cash provided by investing 
activities for the three-month period ended March 31, 1999, was 
$978,000, due primarily to a decrease in short-term investments of 
$3,256,000 and $74,000 of principal payments received on the note 
receivable.  These amounts were offset by $1,500,000 used for the 
acquisition of PhoneZone.com, Inc. and $852,000 used for purchases of 
property and equipment.  Cash used in financing activities during the 
three-month period ended March 31, 1999, was $610,000, relating 
primarily to $888,000 used for the purchase of treasury stock offset by 
$278,000 raised though the issuance of Common Stock pursuant to the 
Company's employee stock purchase and stock option plans.

Additions to equipment during the three-month period ended March 31, 
1999 were $852,000 compared to $339,000 for the same period in the prior 
year.  The Company plans to expend between $3,000,000 and $4,000,000 for 
capital equipment for the year ending December 31, 1999.*  

In the quarter ended March 31, 1999, the Company used $888,000 for the 
purchase of 111,000 shares of treasury stock at an average purchase 
price of $8.00 a share pursuant to a stock repurchase program approved 
by the Company's Board of Directors on October 7, 1998.  The Board of 
Directors authorized the repurchase of up to 1,000,000 shares of Common 
Stock in the open market from time to time subject to market conditions 
and other restrictions.  Through March 31, 1999, the Company has 
purchased 149,000 shares of Common Stock.  The number of shares of 
Common Stock eventually acquired by the Company will depend on 
subsequent developments and corporate needs, and the repurchase program 
may be interrupted or discontinued at any time.  Any shares repurchased 
would be available for re-issuance under the Company's employee stock 
plans.

The Company believes that funds generated from operations, together with 
available cash, will be sufficient to fund its needs for working capital 
for the foreseeable future.* However, should the Company need additional 
funds, it has an unsecured line of credit of $7,000,000 with a bank at 
the bank's prime lending rate. At present, the Company has not directly 
borrowed under this line, and as of March 31, 1999, the Company was not 
contingently liable for any issued and open letters of credit.

Impact of the Year 2000 Issue

The Year 2000 issue results from computer programs written using a two-
digit date field, rather than four, to define the applicable year. 
Certain computer programs utilizing a two-digit date field may recognize 
a date using "00" as the year 1900 rather than the year 2000. This could 
potentially result in a system failure or miscalculations causing 
disruptions of operations, including, among other things, a temporary 
inability to process transactions, send invoices, or engage in other 
similar normal business activities. 

The Company's internal information systems include all hardware and 
software used in its computer and phone systems.  The Company has 
completed an assessment of its internal information systems relative to 
the Year 2000 issue.  The assessment review was broken down between (a) 
information systems scheduled for replacement or modification before the 
year 2000 as part of the Company's ongoing technology review and 
assessment process and (b) information systems that have not been 
scheduled for replacement or modification.  In connection with the 
assessment of information systems scheduled for replacement or 
modification, the Company has confirmed the hardware and software 
replacing or modifying existing hardware and software is Year 2000 
compliant.  The scheduled replacement and modification of information 
systems is expected to be complete no later than the third quarter of 
1999.*  However, if the information systems currently scheduled for 
replacement or modification are not replaced or are not properly 
modified, the Year 2000 issue could have a material effect on the 
operations of the Company by impairing the Company's ability to process 
transactions, send invoices and engage in normal business activities. In 
the event the Company does not properly replace or upgrade key non-
compliant systems, the Company has determined that it can operate in a 
manual mode, for a limited period, while appropriate corrective actions 
are taken with respect to non-compliant systems.

In connection with systems not scheduled for replacement, the Company 
has performed an accounting of these systems, contacted vendors and 
documented its findings.  The findings indicate that although some 
information systems not scheduled for replacement are not compliant, the 
cost of replacing or upgrading those systems will not have a material 
effect on the operations of the Company.*  To date, the Company has 
expended approximately $70,000 on Year 2000 corrections, and total Year 
2000 corrections are expected not to exceed $100,000.*

In addition, the Company has initiated formal communications with its 
significant suppliers to determine the extent to which the Company is 
vulnerable to those third parties' failure to remedy their own Year 2000 
issues.  The Company has received some assurances regarding these issues 
from its vendors, but there are no guarantees that these third-party 
systems will be compliant and that in the event of non-compliance it 
would not have a material effect on the operations of the Company. For 
example, if some of the Company's product vendors are not Year 2000 
compliant, it could impact the Company's ability to obtain products from 
those vendors on a timely basis.

The Company has evaluated its exposure to contingencies related to the 
Year 2000 issues for products it has sold. Although the Company believes 
that its products do not directly contain specific calendar year 
functions, it is possible customers may use the Company's products in 
conjunction with systems that perform non-compliant Year 2000 date 
computations.  Accordingly, there is a risk of litigation associated 
with the possible use of the Company's products by customers, including 
all the risks, costs and uncertainties associated with litigation. 

The Company believes its exposure to the Year 2000 issue will come 
mainly from third parties, either the result of these parties not being 
prepared or other parties these third parties rely upon not being 
prepared.  Although there can be no assurance that unforeseen problems 
will not be encountered, the Company expects that all critical internal 
Year 2000 issues will be resolved as scheduled. *

ADDITIONAL FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK

Hello Direct operates in a rapidly changing environment that involves a 
number of uncertainties, some of which are beyond our control.  In 
addition to the uncertainties described elsewhere in this report, these 
uncertainties include:

        Our Future Operating Results are Uncertain.  

We have grown rapidly and achieved profitability as a result of the 
growth in net sales generated by our outbound telemarketing efforts and 
our Internet site, and the success of our product offering, particularly 
of our proprietary headset products.  We may not be able to maintain 
profitability on a quarterly or annual basis or continue to increase our 
net sales. Our net sales will continue to grow only if we are able to, 
among other things, increase sales to existing customers, grow our 
customer base and expand our product offering.  Our operating results 
could be harmed if we were to experience lower than anticipated sales 
from our outbound telemarketing efforts and our Internet site or higher 
than anticipated product return rates.  We may not be able to continue 
to achieve growth in net sales, and any such growth may not offset 
increases in operating expenses.  Our operating results could also be 
harmed by delays in new product introductions, poor product selection 
and market acceptance of new products or increased competition.  See 
"Management's Discussion and Analysis of Financial Condition and Results 
of Operations."

        Our Quarterly Operating Results are Likely to Fluctuate.  

We have experienced and will experience quarterly variations in net 
sales and net income as a result of many factors, including the 
following:

- the number and timing of catalog mailings,
- catalog response rates,
- product mix,
- the level of selling, general and administrative expenses,
- the timing and level of product development expenses, and
- the timing and success of our and our competitors' new product 
  introductions.

We plan our operating expenditures based on sales forecasts.  If our net 
sales are below our expectations in any given quarter, our operating 
results will suffer.  Due to the foregoing factors, in some future 
quarter our operating results may be below the expectations of public 
market analysts and investors.  In such event, the price of our Common 
Stock would likely suffer.

        We Need to Develop New Products Successfully.  

The market for telecommunications products is generally characterized by 
rapidly changing technology that can render existing products obsolete 
and unmarketable.  We believe our current and future success will depend 
on our ability to identify, develop or source and successfully introduce 
and market, in a timely manner, enhancements to our existing products 
and new products that respond effectively to technological change.  To 
accomplish this, we intend to consult with our direct customer contacts 
and use our product development capabilities.  We have experienced 
delays in the past in introducing certain of our products and could 
encounter similar technical difficulties in the future that could result 
in delayed product introductions or expensive recalls.  We may not 
successfully anticipate technological changes or select and develop new 
and enhanced products on a timely basis.  In addition, if we are able to 
develop or source any products, these products may not gain market 
acceptance. 

         We Depend on Headset Products.  

We derived more than 50% of our net sales in the first quarter of 1999 
from our proprietary telephone headset products. These products have 
higher gross margins than our other products.  We anticipate that these 
headset products will continue to account for a significant portion of 
our net sales and profits in the foreseeable future. *  If sales of our 
telephone headset products were to decline significantly, or the gross 
margins on such products were to decrease significantly, as a result of 
competitive pressures or technological obsolescence, our operating 
results would be harmed. 

        We Rely on Sole or Limited Source Suppliers and Foreign 
Manufacturing.  

A relatively small number of manufacturers produce a substantial portion 
of our proprietary products.  Only three sources manufacture most of 
these products, including all of our headset products.  To date, we have 
been able to obtain adequate supplies of these products, although on 
occasion we have incurred additional delivery costs to air ship products 
to obtain inventory in a timely manner.  If we are unable in the future 
to obtain sufficient quantities of sole or limited source products, or 
to develop alternative sources, shortages of such products would occur.  
This would harm our net sales and operating results.

Seo Won K-Tec, Inc., with operations in South Korea and the Philippines; 
Sinoca Enterprises Co. Ltd., located in Taiwan; and Tru-Tech 
Electronics, located in Malaysia, manufacture a substantial portion of 
our proprietary products to our specifications.  Each of these 
manufacturers is also one of our substantial suppliers.  Products 
manufactured by these manufacturers represented more than 50% of our net 
sales in the first quarter of 1999.  We have contracts of varying terms 
with these manufacturing sources, and we compete with other companies 
for production facilities.  Although we believe that we have established 
close relationships with these foreign manufacturing sources, our future 
success will depend in large measure upon our ability to maintain such 
relationships.

In addition, we face a number of risks inherent in doing business in 
international markets, including, among others:

- unexpected changes in regulatory requirements,
- potentially adverse tax consequences,
- tariffs and other trade barriers,
- fluctuations in currency exchange rates,
- political unrest,
- disruptions or delays in shipments, and 
- changes in economic conditions in countries in which our 
  manufacturing sources are located.

We cannot predict the effect that such factors will have on our business 
arrangements with foreign manufacturing sources.  If any of these 
factors were to render the conduct of business in a particular country 
undesirable or impractical, or if our current foreign manufacturing 
sources were to cease doing business with us for any reason, our 
business and operating results could suffer. 

        Our Business is Highly Competitive.  

The market for customer premise telecommunications products is highly 
competitive.  We compete with a variety of traditional dealers and 
retailers, including catalog companies, electronics specialty stores and 
office products and computer superstores.  A variety of external and 
internal factors could harm our ability to compete, including:

- the functions, performance, price and reliability of the products 
  offered by us and our competitors,
- the timing and success of our and our competitors' new product 
  development efforts, and
- the effectiveness of our and our competitors' marketing efforts.

Certain of our competitors have greater financial, technical, sales and 
marketing and other resources than we have.  We may not be able to 
compete effectively against existing competitors or against new 
competitors that may enter the market.  In addition, while we currently 
do not know of any competitor specializing in distributing a broad line 
of telecommunications products directly to business end-users via 
catalog, outbound telemarketing and the Internet, we may not be able to 
compete successfully in the future in these direct marketing channels, 
which may attract new market entrants, or in other channels that we may 
enter or that may be developed for the sale of telecommunications 
products.  

       Potential Acquisitions Involve Risks. 

We have acquired complementary technologies or businesses in the past 
and may or may not do so in the future.  Future acquisitions may involve 
potentially dilutive issuances of stock, the incurrence of additional 
debt and contingent liabilities or amortization expenses related to 
goodwill and other intangible assets.  Any of these factors could harm 
our results of operations or stock price.  Acquisitions involve numerous 
risks, including: 

- difficulties in assimilating the operations, products, technology, 
  information systems and personnel of the acquired company,
- diverting management's attention from other business concerns,
- impairing relationships with our customers,
- being unable to maintain uniform standards, controls, procedures 
  and policies,
- entering markets in which we have no direct prior experience, and 
- losing key employees of the acquired company. 

In January 1999, we acquired PhoneZone.com, Inc., an Internet publisher 
of a buyer's guide covering telecommunications and networking products 
and services.  As a result of this acquisition, we entered into 
employment contracts with three key employees.  We may not be able to 
successfully integrate the business and personnel we acquired from 
PhoneZone.com or any other businesses, technologies or personnel that we 
acquire in the future. 

       Our Internet Sales Rely on the Continued Growth In Electronic 
Commerce and Internet Infrastructure Development.

Sales of telecommunications products using the Internet do not currently 
represent a significant portion of overall telecommunications products 
sales.  However, our future growth may depend on the growing use and 
acceptance of the Internet as an effective medium of commerce by end 
users.  Rapid growth in the use of and interest in the Internet and 
other online services is a recent development.  No one can be certain 
that acceptance and use of the Internet and other online services will 
continue to develop or that a sufficiently broad base of consumers will 
adopt, and continue to use, the Internet and other online services as a 
medium of commerce.  We will be able to achieve increased sales over the 
Internet only if purchasers of telecommunications products who have 
historically used traditional means of commerce to purchase these 
products view the Internet as a preferred alternative. If our Internet 
efforts are to be successful, these purchasers must accept and use the 
Internet as a means of purchasing telecommunications products, and we 
cannot predict the rate at which purchasers will do so.

The Internet may fail as a commercial marketplace for a number of 
reasons, including potentially inadequate development of the necessary 
network infrastructure or delayed development of enabling technologies 
and performance improvements.  If the number of Internet users or their 
use of Internet resources continues to grow, it may overwhelm the 
existing Internet infrastructure.  Delays in the development or adoption 
of new standards and protocols required to handle increased levels of 
Internet activity or increased governmental regulation could also have a 
similar effect. In addition, growth in Internet usage that is not 
matched by comparable growth in the infrastructure supporting Internet 
usage could result in slower response times or adversely affect usage of 
the Internet.

        Costs of Catalog Mailing, Paper and Printing May Increase.  

Increases in postal rates and paper and printing costs increase the cost 
of our catalog mailings.  An increase in postal rates or higher than 
anticipated paper and printing costs could harm our financial position 
and results of operations to the extent that we are unable to pass such 
increase directly on to customers by raising prices or to offset such 
increase by implementing more efficient printing, mailing and delivery 
systems.  See "Management's Discussion and Analysis of Financial 
Condition and Results of Operations."

        We Face Risks Associated with Managing a Growing Business.  

We have experienced significant growth in our operations that has placed 
significant demands on our administrative, operational and financial 
resources.  The growth in our customer base and changes in our product 
offering have placed, and we expect will continue to place, a 
significant strain on our management and operations, including on our 
product development, sales, customer service and finance and 
administration staffs.  Our future performance will depend in part on 
our ability to successfully implement enhancements to our management 
information systems and to adapt those systems, as necessary, to respond 
to changes in our business.  If we are unable to successfully integrate 
and train new hires, or if we are unable to respond to and manage 
changing business conditions, our business could suffer.  


        We Rely on a Single Facility.  

We house our telemarketing, customer service and distribution functions 
in a single facility in San Jose, California.  We have taken precautions 
to protect ourselves from events that could interrupt order fulfillment 
and customer service, such as storing computer backup data offsite and 
implementing backup power sources.  Notwithstanding these precautions, a 
fire, flood, earthquake or other disaster affecting our facility may 
disable these functions.  Any significant damage to this facility would 
harm our business.

        We Rely on Key Personnel.  

Our future success depends to a significant extent on the efforts of our 
key management personnel.  The loss of the services of any of these 
individuals could harm our business. Competition for employees with 
technical, management, sales, customer service and other skills is 
intense.  Our failure to retain and attract additional qualified 
employees could harm our business.

        We Face Risks Relating to State Sales Tax Collection.  

We presently collect retail occupation tax, commonly referred to as 
sales tax, or other similar tax, only on sales of products to residents 
of the State of California.  Several states have sought to impose on 
direct marketers the burden of collecting state sales taxes on the sale 
of products shipped to residents of those states.  The United States 
Supreme Court has held that it is unconstitutional for a state to impose 
tax collection obligations on an out-of-state mail order company whose 
only contacts with the taxing state are the distribution of catalogs and 
other advertisement materials through the mail and whose subsequent 
delivery of purchased goods is by United States mail or interstate 
common carriers.  In the event of a change in present law, which we have 
no reason to expect, the imposition of a tax collection obligation on us 
by states into which we ship products may result in additional 
administrative expenses to us and price increases to the customer, which 
could harm our business.

        We Face Government Regulations Relating to Mailing Lists.  

We are seeking to expand our in-house list of customers and potential 
customers by continually renting appropriate mailing lists and sending 
our catalogs to prospects obtained from these lists.  In the event that 
the federal or state governments enact privacy legislation resulting in 
the increased regulation of mailing lists, we may be unable to enhance 
and expand our customer list.  In such event, we could also experience 
increased costs in complying with potentially burdensome regulations 
concerning the solicitation of consents to keep or add customer names to 
our mailing lists.

        We Face Risks Associated With Intellectual Property Rights.  

We rely on a combination of patent, copyright, trademark and trade 
secret laws and contractual provisions to protect our proprietary rights 
in our products.  As part of our confidentiality procedures, we 
generally enter into non-disclosure agreements with our employees, 
distributors and corporate partners, and limit access to and 
distribution of our software, documentation and other proprietary 
information.  Despite these precautions, a third party may possibly copy 
or otherwise obtain and use our products or technology independently.  
In addition, effective protection of intellectual property rights may be 
unavailable or limited in certain foreign countries.

No material claims are currently pending regarding the infringement of 
the proprietary rights of third parties by our products, trademarks or 
other proprietary rights.  However, we may receive, in the future, 
communications from third parties asserting that our products infringe, 
or may infringe, the proprietary rights of third parties.  In the event 
of litigation to determine the validity of any third-party claims, such 
litigation, whether or not determined in our favor, could result in 
significant expense to us and divert the efforts of our technical and 
management personnel from productive tasks.  In the event of an adverse 
ruling in such litigation, we might be required to discontinue the use 
and sale of infringing products, expend significant resources to develop 
non-infringing technology or obtain licenses to infringing technology.  
We may not be able to obtain a license for the disputed third-party 
technology on reasonable commercial terms or at all.  If someone asserts 
a successful claim against us and we are unable to develop or license a 
substitute technology, our business would suffer. 

        We May Face Product Liability Claims.  

Our sale of proprietary and other products entails the risk of product 
liability claims, although we have not experienced any material claims 
to date.  While we believe that our product liability insurance coverage 
is currently adequate, this coverage is limited.  We may be unable to 
maintain this insurance in the future at a reasonable cost or in amounts 
sufficient to protect us against losses due to liability.  A successful 
product liability claim brought against us in excess of present 
insurance coverage could harm our business.

        Our Stock Price is Volatile.  

The market price of our common stock has been volatile and may be 
significantly affected by a number of factors, including:

- actual or anticipated fluctuations in our operating results,
- announcements of technological innovations or new products by us 
  or our competitors,
- developments with respect to intellectual property and proprietary 
  rights,
- conditions and trends in the telecommunications and telephone 
  headset industries,
- changes in earnings estimates or recommendations by securities 
  analysts, and
- general market conditions.

In addition, the stock market has from time to time experienced 
significant price and volume fluctuations that have particularly 
affected the market prices for the common stocks of emerging growth 
companies and that have often been unrelated to the operating 
performance of particular companies.  These broad market fluctuations 
may also harm the market price of our Common Stock.

* This statement is a forward-looking statement reflecting current
expectations.  There can be no assurance  that the Company's actual future
performance will meet the Company's current expectations.  Investors are 
strongly encouraged to review the section herein and in Form 10-K entitled
"Additional Factors Affecting  Operating Results and Market Price of Company
Stock"  for a discussion of factors that could affect future  performance.






PART II -- OTHER INFORMATION


Item 1 and Items 3 through 5 are not applicable with respect to the 
current reporting period.

Item 2. -  Changes in Securities and Use of Proceeds.

    On January 20, 1999, the Company issued an aggregate of 50,000 
shares of Common Stock to the former shareholders of 
PhoneZone.com, Inc.  No underwriters were used in connection with 
this issuance.  This issuance was deemed exempt from registration 
under the Securities Act of 1933, as amended, pursuant to Rule 
506, of Regulation D thereunder.


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

a.  Exhibits

27.1 Financial Data Schedule

b.  Reports on Form 8-K.

 No reports on Form 8-K were filed with the Securities and Exchange 
Commission during the quarter ended March 31, 1999.






SIGNATURES


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


                                                HELLO DIRECT, INC.
                                                   (Registrant)



April 19, 1999                           /s/    Dean Witter III         
                                        ----------------------------
                                                Dean Witter III
                                            Chief Financial Officer
                                                 and Secretary