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, 1998
                                       or
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
     For the transition period from ____________________  to  _________________

                         COMMISSION FILE 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                          95138-1858
             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                                May 7, 1998
          -----                               -------------
Common Stock, Par Value $.001                   5,112,757
<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, 1998 and December 31, 1997

        Condensed Statements of Operations for the Three Months Ended 
        March 31, 1998 and 1997

        Condensed Statements of Cash Flows for the Three Months Ended
        March 31, 1998 and 1997

        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

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

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,
                                                   1998           1997
                                                   -------------  -------------
                                                   (unaudited)
<S>                                                <C>            <C>
                             ASSETS
Current assets:
     Cash and cash equivalents                           $2,370         $5,135
     Short-term investments                               5,199          3,830
     Trade accounts receivable, less allowance for
       returns and doubtful accounts                      6,804          5,752
     Inventories                                          6,010          5,137
     Deferred tax assets                                    898            821
     Other current assets                                 1,341          1,771
                                                   -------------  -------------
      Total current assets                               22,622         22,446

Notes receivable                                          4,469          4,542
Property and equipment, net                               4,770          4,819
Long-term deferred tax assets                                 0             25
                                                   -------------  -------------
     Total assets                                       $31,861        $31,832
                                                   =============  =============

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                    $2,965         $3,856
     Accrued expenses                                     1,343          1,319
                                                   -------------  -------------
      Total current liabilities                           4,308          5,175
Non-current liabilities                                     174              0
                                                   -------------  -------------
      Total liabilities                                   4,482          5,175

Stockholders' equity:
     Common stock                                             5              5
     Additional paid-in capital                          28,164         28,045
     Accumulated deficit                                   (345)          (948)
     Less treasury stock, at cost                          (445)          (445)
                                                   -------------  -------------
      Total stockholders' equity                         27,379         26,657
                                                   -------------  -------------
      Total liabilities and stockholders' equity        $31,861        $31,832
                                                   =============  =============
</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,
                                        -------------------
                                        1998      1997
                                        --------- ---------
<S>                                     <C>       <C>
Net sales                                $17,910   $15,936
Cost of goods sold                         8,319     7,853
                                        --------- ---------
      Gross profit                         9,591     8,083

Selling, general and administrative
  expenses                                 8,210     7,341
Product development expenses                 579       410
                                        --------- ---------
      Operating income                       802       332
Other income - net                           203       169
                                        --------- ---------
      Income before income taxes           1,005       501
Income taxes                                 402       201
                                        --------- ---------
      Net income                            $603      $300
                                        ========= =========

Basic per share amounts:
  Net income                               $0.12     $0.06
                                        ========= =========
  Weighted average shares outstanding      5,087     5,015
                                        ========= =========
Diluted per share amounts:
  Net income                               $0.12     $0.06
                                        ========= =========
  Weighted average shares outstanding      5,182     5,073
                                        ========= =========
</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,
                                                         ------------------------
                                                         1998         1997
                                                         -----------  -----------
<S>                                                      <C>          <C>
Cash flows from operating activities:
   Net income                                                  $603         $300
   Adjustments to reconcile net income to net cash
   provided (used in) operating activities:
        Depreciation and amortization                           388          258
        Deferred income taxes                                    77          201
        Deferred rent                                            45            0
        Allowance for returns and doubtful accounts             (61)         151
        Changes in items affecting operations:                    0            0
             Trade accounts receivable                         (986)      (1,312)
             Inventories                                       (873)        (661)
             Other current assets                               430          156
             Accounts payable and accrued expenses             (867)         569
                                                         -----------  -----------
        Net cash provided (used) in operating activities     (1,244)        (338)
                                                         -----------  -----------
Cash flows from investing activities:
   Purchases of property and equipment                         (339)      (1,314)
   Decrease (increase) in investments                        (1,369)       1,900
   Funding of note receivable                                     0       (1,287)
   Payments received on note receivable                          68            0
                                                         -----------  -----------
        Net cash used in investing activities                (1,640)        (701)
                                                         -----------  -----------
Cash flows from financing activities:
   Payments on capital lease obligations                          0          (10)
   Sale of common stock, net                                    119           95
                                                         -----------  -----------
        Net cash provided by financing activities               119           85
                                                         -----------  -----------
Net decrease in cash and cash equivalents                    (2,765)        (954)
Cash and cash equivalents at beginning of period              5,135        2,492
                                                         -----------  -----------
Cash and cash equivalents at end of period                   $2,370       $1,538
                                                         ===========  ===========
</TABLE>
           See accompanying notes to condensed financial statements.
<PAGE>


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, 1997. 

Results of operations for the three-month period ended March 31, 1998 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:

                                                      March 31,
                                                   1998       1997
Basic weighted shares outstanding               5,087,000  5,015,000
Common stock options utilizing treasury
 utilizing treasury stock method when dilutive     95,000     58,000
                                                ---------  ---------
Diluted weighted shares outstanding             5,182,000  5,073,000
                                                =========  =========

3. Recently Adopted Accounting Pronouncements

In 1997, the Financial Accounting Standards Board issued SFAS No. 130, 
"Reporting Comprehensive Income," and SFAS No. 131, "Disclosures About 
Segments of an Enterprise and Related Information."  The Company adopted both 
of these standards on January 1, 1998.  The adoption of SFAS No. 130 and SFAS 
No. 131 did not have a material effect on the financial statements of the 
Company.

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, 1997 (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 1998 Compared to First Quarter 1997

Net Sales.      Net sales reflect total sales less a provision for returns. 
Net  sales increased $1,974,000 or 12.4% to $17,910,000 in the three-month
period  ended March 31, 1998, from $15,936,000 for the comparable period in
1997. This  increase was primarily attributable to a 14% increase in the
number of  catalogs mailed, to 8.3 million from 7.3 million, and a 6.1%
increase in the  total average order size, to $259 from $244.  During the
quarter, the Company  introduced a 64 page catalog replacing the full line
and prospecting versions  of the catalog used in the prior year.  In
connection with the strategic plan  announced in 1997, the Company culled
various low margin, low sales price  branded products from the catalog and,
accordingly, reduced the catalog size  in response to this change in product
offering.

Gross Profit.    Gross profit increased $1,508,000 or 18.7% to $9,591,000 in 
the three-month period ended March 31, 1998, from $8,083,000 for the 
comparable period in 1997.  The gross margin percentage for the three-month 
period was 53.6% for 1998 versus 50.7% for 1997.  This increase in gross 
margin was the result of a shift in product mix toward a larger percentage of 
proprietary products which carry higher gross margins.

Selling, General and Administrative Expenses.   Selling, general and 
administrative expenses increased $869,000 or 11.8% to $8,210,000 in the 
three-month period ended March 31, 1998, from $7,341,000 for the comparable 
period in 1997.  The dollar increase for the three month period in 1998 
compared to the same period in 1997 was associated with planned headcount 
additions to the Company's corporate (outbound) telemarketing group, 
administrative management group, product management team, and customer care 
activities.  However, as a percentage of net sales, these expenses for the 
three-month period declined to 45.8% in 1998 as compared to 46.1% for the same 
three-month period in 1997. A significant portion of the Company's selling, 
general and administrative expenses are 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 $169,000 
or 41.2% to $579,000 for the three month period ended March 31, 1998, from 
$410,000 for the comparable period in 1997.  As a percentage of net sales, 
these expenses for the three-month period were 3.2% for 1998 versus 2.6% for 
the same three-month period in 1997.  The increase was due to the development 
of new products scheduled for introduction later this year.  It is anticipated 
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, 1998, over the prior year.*  

Other Income-net.  Other income includes interest income of $205,000 for the 
three-month period ended March 31, 1998 versus $168,000 for the comparable 
period in 1997.  The interest income relates to interest earned on cash 
investments, short-term investments and on the outstanding note receivable.

Net Income.     Net income increased $303,000 or 101% to $603,000 in the three-
month period ended March 31, 1998, from $300,000 for the comparable period in 
1997.  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 used by operating activities during the three-month period ended March 
31, 1998, was $1,244,000.  This was the result of $1,052,000 provided by 
operations including net income, depreciation and amortization and other non-
cash charges offset by $2,296,000 of changes in operating assets and 
liabilities.  Cash used by investing activities for the three month period 
ended March 31, 1998 was $1,640,000, due primarily to purchases of property 
and equipment of $339,000 and an increase in short-term investments of 
$1,369,000, offset by $68,000 of principal payments received on the note 
receivable. Cash provided by financing activities during the three-month 
period ended March 31, 1998, was $119,000, relating primarily to the issuance 
of common stock pursuant to the Company's employee stock purchase plan.

Additions to equipment during the three-month period ended March 31, 1998 were 
$339,000 compared to $1,314,000 for same period in the prior year.  The 
Company plans to expend between $2,000,000 and $2,500,000 for capital 
equipment for the year ending December 31, 1998.* 

The Company believes funds generated from operations, together with available 
funds remaining from the net proceeds of its initial public offering, will be 
sufficient to finance its working capital needs for the foreseeable future.*  
Should the Company require additional funds, it has available though a major 
financial institution a $5,000,000 unsecured revolving line of credit at that 
institution's prime lending rate. During the three-month period ended March 
31, 1998, the Company did not directly borrow against this credit facility.

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 the Company's control.  In 
addition to the uncertainties described elsewhere in this report, these 
uncertainties include:

        Future Operating Results Uncertain.  The Company has grown rapidly and 
achieved profitability in the past five years as a result of a substantial 
increase in catalog mailings, strong growth in the number of active customers 
and the success of its product offering, particularly of its proprietary 
headset products.  There can be no assurance that the Company will maintain 
profitability on a quarterly or annual basis or continue to increase its net 
sales.  At March 31, 1998, the Company had an accumulated deficit of $345,000.  
Continued growth in the Company's net sales will depend on, among other 
things, the Company's ability to increase sales to existing customers, grow 
its customer base and expand its product offering.  The Company's operating 
results could be materially adversely affected if the Company were to 
experience lower than anticipated catalog response rates from existing and 
prospective customers, higher than anticipated product return rates or higher 
than anticipated increases in paper and postal costs.  There can be no 
assurance that the Company will continue to achieve growth in net sales or 
that such growth will offset increases in operating expenses.  Operating 
results could also be materially adversely affected 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."

        Fluctuations in Quarterly Operating Results.  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 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 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.

        Rapidly Changing Technology; Need to Successfully Develop New Products. 
The market for telecommunications products is generally characterized by 
rapidly changing technology that can render existing products obsolete and 
unmarketable.  The Company believes its current and future success will depend 
on its ability to use its direct customer contacts and product development 
capabilities to identify, develop or source and successfully introduce and 
market in a timely manner both enhancements to its existing products and new 
products that respond effectively to technological change.  The Company has 
experienced delays in the past in introducing certain of its products and 
could encounter similar technical difficulties in the future that will result 
in delayed product introductions or expensive recalls.  There can be no 
assurance that the Company will be successful in anticipating technological 
changes or in selecting and developing new and enhanced products on a timely 
basis, or that, once developed or sourced, any such products will gain market 
acceptance. 

        Dependence on Headset Products.  More than 50% of the Company's net
sales  in the first quarter of 1998 were derived from sales of the Company's 
proprietary telephone headset products, which have higher gross margins than 
its other products.  The Company anticipates that these headset products will
continue to account for a significant portion of its net sales and profits in
the foreseeable future. *  If sales of the Company's telephone headset
products  were to decline significantly for any reason, or the gross margins
on such  products were to decrease significantly for any reason, including
competitive  pressures or technological obsolescence, the Company's operating
results would  be materially adversely affected. 

        Dependence on Sole or Limited Source Suppliers and Foreign
Manufacturing.   A substantial portion of the Company's private label and
proprietary products  are manufactured by a  relatively small number of
manufacturers, and most of  such products, including all headset products,
are manufactured by only three  sources.  To date, the Company has been able
to obtain adequate supplies of  these products, although on occasion the
Company has incurred additional  delivery costs to air ship products to
obtain inventory in a timely manner.   The Company's inability in the future
to obtain sufficient quantities of sole  or limited source products, or to
develop alternative sources, would result in  shortages of such products,
which would have a material adverse effect on the  Company's net sales and
operating results.

        A substantial portion of Hello Direct's proprietary products are 
manufactured to its specifications by Seo Won K-Tec, Inc., located in South 
Korea and the Philippines, Sinoca Enterprises Co. Ltd., located in Taiwan, and 
Transtech Electronics Pte. Ltd., located in Singapore.  Each of these 
manufacturers is a substantial supplier to the Company, and products 
manufactured by these manufacturers represented approximately 50% of the 
Company's net sales in the first quarter of 1998.  The Company has no long-
term contracts with such manufacturing sources and competes with other 
companies for production facilities.  Although the Company believes that it 
has established close relationships with these foreign manufacturing sources, 
the Company's future success will depend in large measure upon its ability to 
maintain such relationships.

        The Company's business is subject to the risks generally associated
with  doing business abroad, such as foreign governmental regulations,
political  unrest, disruptions or delays in shipments and changes in economic
conditions  in countries in which the Company's manufacturing sources are
located.  The  Company cannot predict the effect that such factors will have
on its business  arrangements with foreign manufacturing sources.  If any
such factors were to  render the conduct of business in a particular country
undesirable or  impractical, or if the Company's current foreign
manufacturing sources were to  cease doing business with the Company for any
reason, the Company's business  and operating results could be adversely
affected.  Further, the Company  cannot predict whether additional United
States quotas, duties, taxes or other  charges or restrictions will be
imposed upon the importation of its products  in the future, or what effect
any such actions would have on its business,  financial condition and results
of operations. 

        Competition.  The market for customer premise telecommunications
products  is highly competitive.  The Company competes 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 adversely affect the Company's ability
to compete.   These include the functions, performance, price and reliability
of the  products offered by the Company and its competitors, the timing and
success of  new product development efforts of the Company and its
competitors, and the  effectiveness of the marketing efforts of the Company
and its competitors.   Certain competitors of the Company have greater
financial, technical, sales  and marketing and other resources than the
Company.  There can be no assurance  that the Company will compete
effectively against existing competitors or  against new competitors that may
enter the market.  In addition, while the  Company currently does not know of
any competitor specializing in distributing  a broad line of
telecommunications products directly to business end-users via  catalog,
there can be no assurance that the Company will be able to compete 
successfully in the future in either the direct marketing catalog channel, 
which may attract new market entrants, or in other channels that the Company 
may enter or that may be developed for telecommunications products for such 
customers.  

        Increase in Costs of Catalog Mailing, Paper and Printing.  Increases in 
postal rates and paper and printing costs increase the cost of the Company's 
catalog mailings.  An increase in postal rates or higher than anticipated 
paper and printing costs could have a material adverse impact on the Company's 
financial position and results of operations to the extent that the Company is 
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."

        Risks Associated with Managing a Growing Business.  The Company has 
experienced significant growth in its operations that has placed significant 
demands on the Company's administrative, operational and financial resources.  
The growth in the Company's customer base and changes in its product offering 
have placed, and are expected to continue to place, a significant strain on 
the Company's management and operations, including on its product development, 
customer service and finance and administration staffs.  The Company's future 
performance will depend in part on its ability to successfully implement 
enhancements to its management information systems and to adapt those systems, 
as necessary, to respond to changes in its business. The inability of the 
Company to successfully integrate and train new hires could have a material 
adverse effect on the Company's business or results of operations.  The 
failure of the Company's management to respond to and manage changing business 
conditions could materially adversely affect the Company's business or 
financial condition and results of operations.  See "Management's Discussion 
and Analysis of Financial Condition and Results of Operations."

        Dependence on Single Facility.  The Company's telemarketing, customer 
service and distribution functions are housed in a single facility in San 
Jose, California.  The Company has taken precautions to protect itself from 
events that could interrupt order fulfillment and customer service, such as 
offsite storage of computer backup data and a backup power source.  
Notwithstanding these precautions, there can be no assurance that a fire, 
flood, earthquake or other disaster affecting the Company's facility would not 
disable these functions.  Any significant damage to this facility would have a 
material adverse effect on the Company's business, financial condition and 
results of operations.

        Dependence on Key Personnel.  The Company's future success will
depend to a significant extent on the efforts of its key management
personnel.  The loss  of the services of any of these individuals could have
a material adverse  effect on the Company's business, financial condition and
results of  operations.  Except for Messrs. Glover and Waldera, none of the
Company's  executive officers has entered into an employment agreement with
the Company.   The Company does not maintain key-man life insurance on any of
these  individuals.

        Competition for employees with technical, management, customer
service and  other skills is intense in the telecommunications products
industry.  The  Company's failure to retain and attract additional qualified
employees could  negatively affect the Company's business.

        State Sales Tax Collection.  The Company presently collects 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 those states' residents.  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, the imposition of a tax collection 
obligation on the Company by states into which it ships products may result in 
additional administrative expenses to the Company and price increases to the 
customer, which could adversely affect the Company's operating results.

        Government Regulation of Mailing Lists. The Company seeks to expand
its  in-house list of customers and potential customers ("House List") by
continually  renting appropriate mailing lists and sending its 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, the Company's ability to enhance and expand its House List
could be  adversely affected.  In such event, the Company could also
experience  increased costs in complying with potentially burdensome
regulations  concerning the solicitation of consents to keep or add customer
names to Hello  Direct's mailing lists.

        Risks Associated With Intellectual Property Rights.  The Company
relies on  a combination of patent, copyright, trademark and trade secret
laws and  contractual provisions to protect its proprietary rights in its
products.  As  part of its confidentiality procedures, the Company generally
enters into non- disclosure agreements with its employees, distributors and
corporate partners,  and limits access to and distribution of its software,
documentation and other  proprietary information.  Despite these precautions,
it may be possible for a  third party to copy or otherwise obtain and use the
Company's products or  technology independently.  In addition, effective
protection of intellectual  property rights may be unavailable or limited in
certain foreign countries.

        There are no currently pending material claims that the Company's
products,  trademarks or other proprietary rights significantly infringe the
proprietary  rights of third parties.  However, there can be no assurance
that the Company  will not receive in the future communications from third
parties asserting  that the Company's products infringe, or may infringe, the
proprietary rights  of third parties.  There can be no assurance that
licenses to disputed third- party technology would be available on reasonable
commercial terms, if at all.   In the event of litigation to determine the
validity of any third-party  claims, such litigation, whether or not
determined in favor of the Company,  could result in significant expense to
the Company and divert the efforts of  the Company's technical and management
personnel from productive tasks.  In  the event of an adverse ruling in such
litigation, the Company 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. In the event of a
successful claim against the  Company and the failure of the Company to
develop or license a substitute  technology, the Company's business and
operating results would be adversely  affected. 

        Product Liability and Insurance.  Sale of the Company's proprietary and 
other products through the catalog and alternate channels entails the risk of 
product liability claims, although the Company has not experienced any claims 
to date.  While the Company believes that its product liability insurance 
coverage is currently adequate, such coverage is limited, and there can be no 
assurance that such insurance can be maintained in the future at a reasonable 
cost or in amounts sufficient to protect the Company against losses due to 
liability.  A successful product liability claim brought against the Company 
in excess of relevant insurance coverage could have a material adverse effect 
on the Company's business, financial condition and results of operations.

        Volatility of Stock Price.  The market price of the shares of Common
Stock  has been volatile and may be significantly affected by factors such as
actual  or anticipated fluctuations in the Company's operating results,
announcements  of technological innovations or new products by the Company or
its  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 buy-sell 
recommendations by securities analysts, general market conditions and other 
factors.  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 adversely affect the
market price of  the Company's Common Stock.

        Control by Officers and Directors.  The Company's officers, directors
and  their affiliates will beneficially own approximately 60% of the
outstanding  shares of the Company's Common Stock.  As a result, such
persons, acting  together, have the ability to control all matters requiring
stockholder  approval (including the election of all directors, and any
merger,  consolidation or sale of all or substantially all of the Company's
assets) and  also control the management and affairs of the Company. 
Accordingly, such  concentration of ownership may have the effect of
delaying, deferring or  preventing a change in control of the Company.

PART II -- OTHER INFORMATION


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

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

a.  Exhibits

10.1 &&  Agreement between Hello Direct, Inc. and Seo-Won K-Tec, Inc.

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, 1998.





&& Confidential treatment requested for portions of this document.

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)




May 8, 1998
                               /s/  Raymond E. Nystrom          
                               ------------------------
Date                              Raymond E. Nystrom
                                  Chief Financial Officer