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 December 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 0-27266


                           WESTELL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

                     DELAWARE                                  36-3154957
          (State or other jurisdiction of                    (I.R.S. Employer
          incorporation or organization)               Identification Number)

     750 N. COMMONS DRIVE, AURORA, IL                          60504
    (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code   (630) 898-2500

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)


Indicate  by check or mark  whether  the  registrant  (1) has filed all  reports
required to be filed by Sections 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.


Class A Common  Stock,  $0.01 Par Value - 16,914,573  shares at January 31, 1999
Class B Common Stock, $0.01 Par Value - 19,527,069 shares at January 31, 1999


<PAGE>



                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                                    FORM 10-Q
                                      INDEX


PART  I  FINANCIAL INFORMATION:                                         Page No.

         Item 1. Financial Statements

                  Condensed Consolidated Balance Sheets                        3
                  - As of March 31, 1998 and December 31, 1998 (unaudited)

                  Condensed Consolidated Statements of Operations (unaudited)  4
                  - Three months ended December 31, 1997 and 1998
                  - Nine months ended December 31, 1997 and 1998

                  Condensed Consolidated  Statements of Cash Flows (unaudited) 5
                  - Nine months ended December 31, 1997 and 1998

                  Notes to the Condensed Consolidated Financial Statements 
                    (unaudited)                                                6

         Item 2. Management's Discussion and Analysis of Financial Condition
                    and Results of Operations                                  8


PART II  OTHER INFORMATION

         Item 5. Other events                                                 13

         Item 6. Exhibits and Reports on Form 8-K                             13

SAFE HARBOR STATEMENT
Certain  statements  contained  under  "Management's  Discussion and Analysis of
Financial  Condition and Results of Operations" in this form 10-Q, which are not
historical facts (including,  without  limitation,  statements about future ADSL
pricing and sales volume levels,  liquidity,  the decrease in ADSL manufacturing
costs, the Company's continued  investment in research and development and sales
and  marketing,  the impact of year 2000 on the  Company and its  customers  and
vendors,  our  confidence  and  strategies  and our  expectations  about new and
existing products, technologies,  opportunities, the emerging DSL market, demand
and acceptance of new and existing products and future commercial  deployment of
the Company's  products such as its DSL systems) are forward looking  statements
that involve risks and uncertainties.  These risks include,  but are not limited
to, product demand and market  acceptance risks (including the future commercial
acceptance  of the  Company's  ADSL  systems by  telephone  companies  and other
customers),  the impact of competitive  products and technologies (such as cable
modems and fiber optic cable), competitive pricing pressures, forward pricing of
ADSL  systems,  product  development,  excess and obsolete  inventory due to new
product development,  commercialization and technological delays or difficulties
(including delays or difficulties in developing,  producing, testing and selling
new  products  and  technologies,  such  as ADSL  systems),  the  effect  of the
Company's  accounting  policies,  the effect of economic  conditions  and trade,
legal,  social,  and  economic  risks  (such  as  import,  licensing  and  trade
restrictions)  and other  risks more fully  described  in the  Company's  Annual
Report on Form 10-K for the fiscal  year ended  March 31, 1998 under the section
"Risk  Factors".  The Company  undertakes no obligation to release  publicly the
result of any revisions to these forward looking  statements that may be made to
reflect  events  or  circumstances  after  the date  hereof  or to  reflect  the
occurrence of unanticipated events.



<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                     ASSETS
                                                                               March 31,        December 31,
                                                                                1998                1998
                                                                           ----------------    ----------------
                                                                                                 (unaudited)
                                                                                     (in thousands)
<S>                                                                               <C>                  <C>    
Current assets:
   Cash and cash equivalents...........................................           $ 43,515             $ 9,587
   Short term investments..............................................                684               5,450
   Accounts receivable (net of allowance of $730,000 and $781,000,
   respectively).......................................................             12,399              13,016
   Inventories.........................................................              9,428              10,905
   Prepaid expenses and other current assets...........................                100                 449
   Refundable income taxes.............................................                110                 101
   Deferred income tax asset...........................................              2,498               1,625
                                                                           ----------------    ----------------
       Total current assets............................................             68,734              41,133
                                                                           ----------------    ----------------
 Property and equipment:
   Machinery and equipment.............................................             15,630              18,301
   Office, computer and research equipment.............................             17,090              17,204
   Leasehold improvements..............................................              1,584               2,284
                                                                           ----------------    ----------------
                                                                                    34,304              37,789
   Less accumulated depreciation and amortization......................             20,816              24,222
                                                                           ----------------
                                                                                               ----------------
    Property and equipment, net........................................             13,488              13,567
                                                                           ----------------    ----------------
 Deferred income tax asset and other assets............................             16,183              17,069
                                                                           ----------------    ----------------
       Total assets....................................................          $  98,405           $  71,769
                                                                           ================    ================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
   Accounts payable....................................................            $ 7,472             $ 8,272
   Accrued expenses....................................................              6,296               5,734
   Accrued compensation................................................              5,664               4,589
   Current portion of long-term debt...................................              1,407               1,854
   Deferred revenue....................................................                414                 413
                                                                           ----------------    ----------------
    Total current liabilities..........................................             21,253              20,862
                                                                           ----------------    ----------------
 Long-term debt........................................................              3,013               2,760
                                                                           ----------------    ----------------
 Other long-term liabilities...........................................                998               1,131
                                                                           ----------------    ----------------
 Commitments and contingencies
 Stockholders' equity:
 Class A common stock, par $0.01.......................................                154                 169
   Authorized - 43,500,000 shares
   Issued and  outstanding - 15,371,900  shares at March 31, 1998 and 16,904,073
   shares at December 31, 1998
 Class B common stock, par $0.01.......................................                210                 195
   Authorized - 25,000,000 shares
   Issued and  outstanding - 21,030,857  shares at March 31, 1998 and 19,537,569
   shares at December 31, 1998
 Preferred stock, par $0.01............................................                  -                   -
   Authorized - 1,000,000 shares
   Issued and outstanding - none
 Additional paid-in capital............................................             97,254              97,508
 Cumulative translation adjustment.....................................               (213)                (66)
 Accumulated deficit...................................................            (24,264)            (50,790)
                                                                           ----------------    ----------------
       Total stockholders' equity......................................             73,141              47,016
                                                                           ================    ================
         Total liabilities and stockholders' equity....................          $  98,405           $  71,769
                                                                           ================    ================

         The accompanying notes are an integral part of these Condensed
                       Consolidated Financial Statements.

</TABLE>

<PAGE>


<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>


                                                     Three Months Ended                Nine Months Ended
                                                        December 31,                     December 31,
                                                 ----------------------------      --------------------------
                                                    1997            1998             1997            1998
                                                 ------------    ------------      ----------     -----------
                                                                         (unaudited)
                                                            (in thousands, except per share data)

<S>                                                 <C>             <C>             <C>             <C>     
Equipment sales...............................      $ 18,082        $ 18,140        $ 52,858        $ 54,468
Services......................................         3,540           5,245           9,792          14,590
                                                 ------------    ------------      ----------     -----------
  Total revenues..............................        21,622          23,385          62,650          69,058

Cost of equipment sales.......................        13,154          13,922          37,940          42,740
Cost of services..............................         2,004           3,372           4,999           8,715
                                                 ------------    ------------      ----------     -----------
  Total cost of goods sold....................        15,158          17,294          42,939          51,455
                                                 ------------    ------------      ----------     -----------

   Gross margin...............................         6,464           6,091          19,711          17,603
Operating expenses:
  Sales and marketing.........................         5,052           5,376          15,174          15,406
  Research and development....................         7,111           6,975          19,878          19,683
  General and administrative..................         3,294           3,420           9,340           9,693
  Restructuring charge........................         1,383              --           1,383              --
                                                 ------------    ------------      ----------     -----------
                                                 ------------    ------------      ----------     -----------
   Total operating expenses...................        16,840          15,771          45,775          44,782
                                                 ------------    ------------      ----------     -----------
Operating loss................................       (10,376)         (9,680)        (26,064)        (27,179)

Other income, net.............................        12,714             142          13,570             925
Interest expense..............................           122             115             247             271
                                                 ------------    ------------      ----------     -----------
Income (loss) before taxes....................         2,216          (9,653)        (12,741)        (26,525)
Provision (benefit) for income taxes..........           783              --          (5,137)              --
                                                 ------------    ------------      ----------     -----------
                                                 ============    ============      ==========     ===========
Net income (loss).............................       $ 1,433       $  (9,653)       $ (7,604)      $ (26,525)
                                                 ============    ============      ==========     ===========

Net income (loss) per basic and diluted
  common share................................        $ 0.04        $  (0.26)        $ (0.21)        $ (0.73)
                                                 ============    ============      ==========     ===========
  Average number of common shares outstanding:
       Basic:                                         36,358          36,432          36,339          36,422
       Diluted:                                       36,745          36,432          36,339          36,422





              The accompanying notes are an integral part of these
                  Condensed Consolidated Financial Statements

</TABLE>

<PAGE>

<TABLE>

                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>


                                                                                 Nine Months Ended
                                                                                    December 31,
                                                                       -------------------------------------
                                                                            1997                    1998
                                                                       -----------------    ----------------

                                                                                    (unaudited)
                                                                                   (in thousands)
<S>                                                                       <C>                 <C>      
Cash flows from operating activities:
Net loss ...................................................              $ (7,604)           $(26,525)
  Reconciliation of net loss to net cash provided by
     (used in) operating activities:
  Depreciation and amortization ............................                 5,273               5,501
  Stock awards .............................................                    36                  --
  Deferred taxes ...........................................                (5,137)                 --
Changes in assets and liabilities:
  Increase in accounts receivable ..........................                (1,369)               (565)
  Decrease (increase) in inventory .........................                 1,653              (1,392)
  Decrease (increase) in prepaid expenses and deposits .....                   995                (349)
  Decrease in refundable income taxes ......................                    --                   9
  Increase in accounts payable and accrued expenses ........                 1,882                 371
  Increase (decrease) in accrued compensation ..............                   609              (1,075)
  Increase (decrease) in deferred revenues .................                    16                  (1)
                                                                          --------            --------
     Net cash used in operating activities .................                (3,646)            (24,026)
                                                                          --------            --------

Cash flows from investing activities:
  Purchases of property and equipment ......................                (3,719)             (5,580)
  Decrease (increase) in other assets ......................                    97                 (13)
  Decrease (increase) in short term investments ............                   541              (4,766)
  Land and building construction held for resale ...........                16,203                  --
                                                                          --------            --------
     Net cash provided by (used in) investing activities ...                13,122             (10,359)
                                                                          --------            --------

Cash flows from financing activities:
  Net borrowing under revolving promissory notes ...........                   550                  --
  Borrowing (repayment) of long-term debt and leases payable                (1,678)                194
  Cash distributed to Meridian LLC partner .................                  (500)                 --
  Proceeds from the issuance of common stock ...............                   506                 254
                                                                          --------            --------
     Net cash provided by (used in) financing activities ...                (1,122)                448
                                                                          --------            --------

Effect of exchange rate changes on cash ....................                     4                   9
     Net increase (decrease) in cash .......................                 8,358             (33,928)
Cash and cash equivalents, beginning of period .............                28,437              43,515
                                                                          ========            ========
Cash and cash equivalents, end of period ...................              $ 36,795            $  9,587
                                                                          ========            ========




              The accompanying notes are an integral part of these
                  Condensed Consolidated Financial Statements

</TABLE>

<PAGE>


                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.  BASIS OF PRESENTATION

         The accompanying  unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information  and with the  instructions to Form 10-Q and
Rule  10-01 of  Regulation  S-X.  Accordingly,  they do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for  complete  financial  statements.  It  is  suggested  that  these  condensed
consolidated  financial  statements be read in conjunction with the consolidated
financial  statements and notes thereto  included in the Company's Annual Report
on Form 10-K for the year ended March 31, 1998.

         In  the  opinion  of  management,   the  unaudited   interim  financial
statements  included  herein  reflect  all  adjustments,  consisting  of  normal
recurring  adjustments,  necessary to present fairly the Company's  consolidated
financial  position and the results of operations and cash flows at December 31,
1998, and for all periods presented. The results of operations for the three and
nine month periods ended December 31, 1998 are not necessarily indicative of the
results that may be expected for the fiscal year ending March 31, 1999.

NOTE 2. COMPUTATION OF NET LOSS PER SHARE

         In February 1997,  the Financial  Accounting  Standards  Board ("FASB")
issued  SFAS No.  128 which  requires  companies  to present  basic and  diluted
earnings per share effective for financial  statements issued for periods ending
after December 15, 1997. The computation of basic earnings per share is computed
using the  weighted  average  number of common  shares  outstanding  during  the
period.  Diluted  earnings per share  includes the number of  additional  common
shares that would have been outstanding if the dilutive  potential common shares
had been issued.  The effect of this  computation  on the number of  outstanding
shares is  antidilutive  for the nine month periods ended December 31, 1997, and
1998, and the three month period ended December 31, 1998, therefore the net loss
per basic and diluted earnings per share are the same.

NOTE 3. COMMITMENTS AND CONTINGENCIES:

         During the quarter and year to date  periods  ended  December 31, 1998,
the Company  received ADSL orders from  customers that were priced below current
production  costs,  which  caused the Company to record a loss of  approximately
$800,000  and $2.5  million,  respectively,  for such  orders  received in those
periods.  The Company  could  continue to record losses on ADSL product sales if
management   enters  into  similar   sales   arrangements   prior  to  achieving
manufacturing  cost reductions of ADSL products  through (i) obtaining more cost
effective DSL chipsets,  (ii) product design  efficiencies  and (iii)  economies
related to volume production.

         In February  1999,  the Company  received an ADSL order from a customer
priced below anticipated  production costs. The Company anticipates  recognizing
an  estimated  loss of $200,000 in the quarter  ended March 31, 1999  related to
this order.


<PAGE>




                   WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 4. INTERIM SEGMENT INFORMATION:

         Westell's  reportable  segments are strategic business units that offer
different  products  and  services.  They are managed  separately  because  each
business requires different technology and market strategy. They consist of:

               1) A  telecommunications  equipment  manufacturer  of local  loop
               access  products  ("Telecom  Equipment"),  and  

               2) A multi-point  telecommunications  service bureau specializing
               in  audio   teleconferencing,   multi-point  video  conferencing,
               broadcast fax and multimedia  teleconferencing services ("Telecom
               Services").

         Performance  of  these  segments  is  evaluated   utilizing,   revenue,
operating income and total asset  measurements.  The accounting  policies of the
segments  are  the  same  as  those  for  Westell  Technologies,   Inc.  Segment
information  for the three and  nine-month  periods ended  December 31, 1997 and
1998, are as follows:

<TABLE>
<CAPTION>

                                              Telecom               Telecom
                                             Equipment             Services                Total
<S>                                           <C>                   <C>                  <C>     
Three months ended December 31, 1997
      Revenues..........................      $18,082               $ 3,540              $ 21,622
      Operating income (loss)...........      (10,975)                  599               (10,376)
      Depreciation and amortization.....        1,454                   342                 1,796
      Total assets......................       95,321                 6,611               101,932

Three months ended December 31, 1998
      Revenues..........................      $18,140               $ 5,245              $ 23,385
      Operating income (loss)...........      (10,173)                  493                (9,680)
      Depreciation and amortization.....        1,400                   431                 1,831
      Total assets......................       61,133                10,636                71,769

Nine months ended December 31, 1997
      Revenues..........................      $52,858               $ 9,792              $ 62,650
      Operating income (loss)...........      (28,410)                2,346               (26,064)
      Depreciation and amortization.....        4,347                   926                 5,273
      Total assets......................       95,321                 6,611               101,932

Nine months ended December 31, 1998
      Revenues..........................       54,468                14,590                69,058
      Operating income (loss)...........      (29,347)                2,168               (27,179)
      Depreciation and amortization.....        4,615                   886                 5,501
      Total assets......................       61,133                10,636                71,769


</TABLE>




<PAGE>



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

OVERVIEW
         Westell Technologies, Inc. ("Westell" or the "Company") derives most of
its  revenues  from  the  sale  of  telecommunications   equipment  that  enable
telecommunications   services  over  copper   telephone   wires.  The  Company's
telecommunications  equipment  revenues  can be  categorized  in  three  product
groups:  (i)  products  based on  digital  subscriber  line  technologies  ("DSL
products"), including Asymmetric Digital Subscriber Line ("ADSL"), Rate adaptive
Digital  Subscriber  Line ("RADSL") and High bit-rate  Digital  Subscriber  Line
("HDSL")  systems,  which  enable  telephone  companies  to provide  interactive
multimedia  services over copper  telephone  wires,  such as high speed Internet
access,   video  on  demand,   medical  imaging  and  video   conferencing   and
telecommuting,  while simultaneously  carrying  traditional  telephone services,
(ii) Digital Signal Hierarchy Level 1 based products ("DS1 products"), which are
used by telephone  companies to enable high speed  digital T-1  transmission  at
approximately  1.5 mega bits per second and (iii) Digital Signal Hierarchy Level
0 based  products  ("DS0  products"),  which are used by telephone  companies to
deliver  digital  services at speeds ranging from  approximately  2.4 to 64 kilo
bits per second and analog services over a 4 kilohertz bandwidth.  The Company's
service  revenues  are  derived  from  audio,  multi port video and multi  media
teleconferencing  services.  Westell's net revenues  increased 8.2% and 10.2% in
the three month and nine month  periods ended  December 31, 1998,  respectively,
when compared to the same periods last year. The increased revenue was driven by
higher  service  revenue as a result of increased  teleconference  call minutes.
Equipment  revenue increased for the three and nine month periods primarily as a
result of  increased  DS1 sales  which was  offset by  decreased  DSL  shipments
attributable to uneven demand for DSL products.  Equipment  revenue for the nine
month  period  was also  affected  by an  anticipated  decrease  in DS0 sales as
network   providers   transition  to  higher  speed   digital  based   products.
Historically,  revenue from DS1 and DS0 products  provided most of the Company's
revenue.

         The Company  expects to continue to evaluate new product  opportunities
and engage in appropriate research and development activities that represent the
best fit with the Company's  product  portfolio and market  position.  This will
require the Company to continue to invest  resources in research and development
and sales and marketing,  which could  adversely  affect  short-term  results of
operations.  Due to the  Company's  ongoing  investment in DSL  technology,  the
Company  anticipates losses in the March 1999 quarter and losses may extend into
fiscal  2000.   The  Company   believes  that  its  future  revenue  growth  and
profitability  will  depend on its  success in  creating  sustainable  DSL sales
opportunities either directly, or in conjunction with, its partners;  developing
new and enhanced DS1 products; other niche products for both DSL and DS1 markets
and growth in  teleconference  service  revenues.  The  market for DSL  products
continues to be increasingly  competitive  causing the Company to offer its ADSL
products at prices below current production costs (i.e.,  forward pricing of DSL
products).  For  instance,  in the September  and December  1998  quarters,  the
Company  received ADSL orders from  customers  priced below  current  production
costs.   This  caused  the  Company  to  recognize  forward  pricing  losses  of
approximately $1.7 million and $800,000, respectively, for such orders received.
Management  believes that  manufacturing  costs will decrease when (i) more cost
effective chipsets are available, (ii) product design efficiencies are obtained,
and (iii)  economies of scale are  obtained  related to  increased  volume.  The
Company could continue to record losses on ADSL product sales prior to achieving
cost-effective  chipsets,  product design  efficiencies and economies related to
volume  production,  which would have a material adverse effect on the Company's
business and results of operations.

         In the current  fiscal  year,  the majority of the DSL revenue has been
generated by shipments of ADSL systems at varying  levels for data  applications
(i.e.,  Internet  access and work at home) due to the growth in users  accessing
the World Wide Web through the  Internet  and the need to increase  transmission
speed when accessing local area networks and downloading large text graphics and
video files.  In view of the  Company's  reliance on the emerging DSL market for
growth and the unpredictability of orders and subsequent  revenues,  the Company
believes  that period to period  comparisons  of its  financial  results are not
necessarily  meaningful and should not be relied upon as an indication of future
performance.  Revenues from DS0 products have declined in recent years as telcos
continue to move from analog to digital transmission  services. The Company also
expects that revenues from Network  Interface  Unit ("NIU")  products in its DS1
product group may decline as telcos increase the use of alternative technologies
such as HDSL.  Failure to increase  revenues from new  products,  whether due to
lack of market acceptance,  competition, pricing pressures, technological change
or otherwise, would have a material adverse effect on the Company's business and
results of  operations.  


<PAGE>


RESULTS OF OPERATIONS - Periods ended December 31, 1998
compared to periods ended December 31, 1997


Revenues.  The Company's revenues increased 8.2% from $21.6 million in the three
months  ended  December  31,  1997 to $23.4  million in the three  months  ended
December 31, 1998.  This revenue  increase was  primarily  due to increased  DS1
revenue of $1.1 million and increased  teleconference  service  revenue from the
Company's  Conference Plus, Inc.  subsidiary of $1.7 million.  The increased DS1
revenue was due to overall unit volume increases offset in part by lower average
system sale prices  resulting  primarily from changes in product mix.  Increased
teleconference  service  revenue  reflects an increase  in call  minutes.  These
increases were partially offset by a $1.2 million decrease in DSL revenue in the
three  months ended  December  31, 1998.  The decrease in DSL revenue was due to
lower unit shipments and lower average selling price of ADSL products.

The  Company's  revenues  increased  10.2% from $62.7 million in the nine months
ended  December 31, 1997 to $69.1 million in the nine months ended  December 31,
1998.  The  revenue  increase  in the nine  month  period was  primarily  due to
increased  teleconference  service of $4.8 million and  increased DS1 revenue of
$2.5 million when  compared  with the same period last year.  Increased  service
revenue  reflects  an  increase  in  teleconference  call  minutes.  DS1 revenue
increased due to overall unit volume  increases  offset in part by lower average
system  sale prices  resulting  primarily  from  changes in product  mix.  These
increases  were  partially  offset by a $1.0 million  decrease in DS0 revenue as
network providers  continue to transition to higher speed digital based products
and a $294,000 decrease in DSL revenue resulting from lower average sales prices
due to forward  pricing  pressures.  The Company  believes that DS0 revenue will
continue to decline as network providers  continue to transition to higher speed
digital based products.

Gross Margin.  Gross margin as a percentage of revenue  decreased  from 29.9% in
the three  months  ended  December  31, 1997 to 26.0% in the three  months ended
December 31, 1998 and decreased from 31.5% in the nine months ended December 31,
1997 to 25.5% in the nine months ended  December 31, 1998. The decrease in gross
profit  margin  was  primarily  due  to  recording  forward  pricing  losses  of
approximately  $800,000  and $2.5  million in the three and nine  month  periods
ended December 31, 1998, respectively for ADSL orders received in those periods.
During the September  quarter,  the Company's  Conference Plus, Inc.  subsidiary
opened a second  facility  to handle  increased  call  minutes  and  invested in
additional infrastructure enhancements which also impacted gross margins.

Sales and Marketing.  Sales and marketing  expenses  increased  6.4%,  from $5.1
million in the three months ended December 31, 1997 to $5.4 million in the three
months ended  December 31, 1998 and  increased  1.5%,  from $15.2 million in the
nine months ended  December  31, 1997 to $15.4  million in the nine months ended
December 31, 1998.  Sales and  marketing  expenses  decreased as a percentage of
revenues from 23.4% in the three months ended  December 31, 1997 to 23.0% in the
three months ended  December 31, 1998 and  decreased as a percentage  of revenue
from 24.2% in the nine month period ended December 31, 1997 to 22.3% in the nine
months  ended  December  31,  1998.  The  increase  in sales and  marketing  was
primarily due to increased costs related to DSL and DS1/DS0  marketing  programs
and increased  selling  expenses  related to supporting  additional sales in the
teleconference  services business unit for both the three and nine month periods
ended  December 31, 1998.  The increase in sales and marketing  expenses for the
three and nine month periods was partially  offset by cost reductions  resulting
from  management's  initiatives  that took  place in the March  1998  quarter to
streamline DSL sales and marketing efforts.  The Company believes that continued
investment in sales and marketing  will be required to expand its product lines,
bring new products to market and service customers globally.



<PAGE>


RESULTS OF OPERATIONS - continued

Research and Development.  Research and development  expenses decreased 1.9%, or
$136,000,  to $7.1  million in the three  months  ended  December  31,  1998 and
decreased 1.0%, or $195,000,  to $19.7 million in the nine months ended December
31,  1998.  Research and  development  expenses  decreased  as a  percentage  of
revenues from 32.9% in the three months ended  December 31, 1997 to 29.8% in the
three months ended  December 31, 1998 and  decreased as a percentage of revenues
from  31.7% in the nine  months  ended  December  31,  1997 to 28.5% in the nine
months ended  December 31, 1998.  Research and  development  expenses  decreased
slightly due to lower  prototyping  and  engineering  consulting  costs from the
comparable  periods last year. The Company believes that a continued  commitment
to  research  and  development  will be  required  for  the  Company  to  remain
competitive.

General and Administrative.  General and administrative expenses increased 3.8%,
from $3.3 million in the three months ended December 31, 1997 to $3.4 million in
the three months ended December 31, 1998 and increased  3.8%,  from $9.3 million
in the nine months  ended  December  31, 1997 to $9.7 million in the nine months
ended  December 31, 1998.  General and  administrative  expenses  decreased as a
percentage of revenues from 15.2% in the three months ended December 31, 1997 to
14.6% in the three months ended  December 31, 1998 and decreased as a percentage
of revenues  from 14.9% in the nine months  ended  December 31, 1997 to 14.0% in
the nine months  ended  December 31,  1998.  The dollar  increase in general and
administrative  expense was primarily due to costs  associated with  information
systems  infrastructure  enhancements at the Company's  teleconference  services
business unit.  This increase was partially  offset by the results of management
initiatives  and  restructuring  that took  place in the March  1998  quarter to
streamline administrative functions both domestically and internationally.

Restructuring  charge.  The Company  recognized  a  non-recurring  restructuring
charge  of  $1.4  million  in  the  three  months  ended  December  1997.   This
restructuring  charge  included  personnel,  facility  and  certain  development
contract costs related to restructuring global DSL operations.

Other income,  net. Other income,  net decreased from $12.7 million in the three
months ended  December  31, 1997 to $142,000 in the three months ended  December
31, 1998 and decreased  from $13.6 million in the nine months ended December 31,
1997 to $925,000 in the nine months ended  December 31, 1998.  The December 1997
quarter and the corresponding year to date period includes a one time benefit of
$12.0  million,  net  of  expenses,  for a  break-up  fee  received  from  Texas
Instruments related to the proposed  Westell/Amati merger.  Excluding the effect
of this one time benefit,  Other  income,  net would have been $714,000 and $1.6
million in the three and nine month periods ended December 31, 1997.  Income for
the periods,  absent the one time benefit,  was due to interest income earned on
temporary cash investments made as a result of investing available funds.

Interest  expense.  Interest expense decreased from $122,000 in the three months
ended  December 31, 1997 to $115,000 in the three months ended December 31, 1998
and  increased  from  $247,000 in the nine  months  ended  December  31, 1997 to
$271,000 in the nine months ended December 31, 1998. Interest expense during the
periods is a result of interest incurred on net obligations  outstanding  during
the period under equipment facility borrowings and capital leases.

Provision  (benefit)  for income  taxes.  Provision  (benefit)  for income taxes
decreased  from a  provision  of $783,000  and a benefit of $5.1  million in the
three and nine month  periods  ended  December  31, 1997 to $0 for the three and
nine month  periods ended  December 31, 1998. As in the quarter ended  September
30, 1998,  the Company has provided a valuation  reserve for the entire  benefit
generated  during the current  quarter of $3.8 million since the resulting gross
deferred  tax asset would have  exceeded  the value of tax  planning  strategies
available to the Company.  The Company  will  evaluate on a quarterly  basis its
ability to record a benefit  for income  taxes in  relation  to the value of tax
planning strategies available in relation to the resulting gross deferred asset.

LIQUIDITY AND CAPITAL RESOURCES

As of December  31, 1998,  the Company had $15.0  million in cash and short term
investments  which is being  invested in short term  investments  consisting  of
federal  government  agency  instruments  and the highest rated grade  corporate
commercial paper.


<PAGE>


RESULTS OF OPERATIONS - continued


The Company's  operating  activities used cash of approximately $24.0 million in
the nine months ended December 31, 1998,  which  resulted  primarily from a loss
from  operations  before  income taxes of $21.0  million (net of  depreciation),
increases in accounts receivable,  inventory and prepaid expenses and a decrease
in accrued  compensation  offset  partially by increases in accounts payable and
accrued expenses.

Capital expenditures for the nine month period ended December 31, 1998 were $5.6
million, all of which was funded by available cash. The Company expects to spend
approximately  $1.0  million for the  remainder  of fiscal year 1999  related to
capital equipment expenditures.

At December 31, 1998,  the Company's  principle  sources of liquidity were $15.0
million of cash and short term  investments  and a secured credit  facility that
the Company may borrow up to $12.4 based upon  receivables and inventory  levels
and up to an additional  $5.0 million under a secured  equipment line of credit.
The Company is  currently  considering  appropriate  actions to address its cash
requirements going forward. These actions include,  without limitation,  seeking
alternative funding to supplement its current cash position and available credit
lines to meet its cash  requirements  for the next 12 months.  Cash in excess of
operating  requirements  will  continue  to be invested on a short term basis in
federal  government  agency  instruments and the highest rated grade  commercial
paper.

The Company has  approximately  $3.8 million in income tax credit  carryforwards
and a tax benefit of $25.9 million related to a net operating loss  carryforward
that is  available  to offset  taxable  income  in the  future.  The tax  credit
carryforwards  begin to expire in 2008 and the net operating  loss  carryforward
begins to expire in 2012.

Realization  of  deferred  tax  assets  associated  with  the  Company's  future
deductible  temporary  differences,  net operating  loss  carryforwards  and tax
credit  carryforwards  is dependent upon  generating  sufficient  taxable income
prior to their expiration. Although realization of the deferred tax asset is not
assured and the Company has incurred  operating  losses for the 1996,  1997, and
1998 fiscal years,  management  believes that it is more likely than not that it
will  generate  taxable  income  sufficient  to realize the recorded tax benefit
associated with future temporary  differences,  NOL carryforwards and tax credit
carryforwards  prior  to  their  expiration  through  a  tax  planning  strategy
available to the Company.  Management  has  determined  that the strategy was no
longer  sufficient  to realize all of the deferred  tax assets  available to the
Company and as such, has recorded a valuation  allowance of $13.5 million.  On a
quarterly basis,  management will assess whether it remains more likely than not
that the  recorded  deferred  tax asset will be  realized.  If the tax  planning
strategy is not  sufficient to generate  taxable  income to recover the deferred
tax benefit  recorded,  an increase in the valuation  allowance will be required
through a charge to the income tax provision.  However,  if the Company achieves
sufficient  profitability or has available additional tax planning strategies to
utilize a greater portion of the deferred tax asset, an income tax benefit would
be recorded to decrease the valuation allowance.

YEAR 2000 COMPLIANCE ISSUE

         The Company has determined that it is required to modify and/or replace
portions of its software systems so that they will properly utilize dates beyond
December 31, 1999 (the "year 2000 compliance").  The Company believes that, with
software upgrades and modifications and with the conversion to new software, the
impact of the year 2000 on its computer  systems can be mitigated.  However,  if
the upgrades,  modifications  and conversions are not made, or are not made in a
timely  manner,  the year  2000  could  have a  material  adverse  impact on the
Company's operations.  A plan to remediate the Company's Information  Technology
("IT") systems,  which will include efforts to mitigate the impact that the year
2000 will have on the Company,  has begun and is projected to be  implemented by
March 31, 1999 (the "Project").

         The Project includes upgrading system software,  hardware and processes
that are not  exclusively  related to year 2000  compliance.  The  Project  will
utilize  both  internal  and  external  resources.  The  Company has a full-time
manager  dedicated to the Project as well as addressing  the Company's year 2000
compliance  issues.  The Project  cost for the Company is  estimated  to be $1.8
million.  These  costs are  expected  to be  expensed  as  incurred,  except for
approximately   $600,000  that  will  be  capitalized  unrelated  to  year  2000
compliance. The Company has expensed approximately $600,000 related this Project
and has incurred approximately $260,000 in capital expenditures,  as of December
31, 1998. The Project team is currently meeting its objectives and believes that
this Project will be completed as planned and within cost estimates. The Project
costs and the date on which the Company plans to complete this Project are based




<PAGE>


RESULTS OF OPERATIONS - continued

on  management's  best  estimates,   which  were  derived   utilizing   numerous
assumptions of future events,  including the continued  availability  of certain
resources,  third party modification plans and other factors. However, there can
be no guarantee  that these  estimates will be achieved and actual results could
differ materially from these estimates and plans.

         The  Company  has begun  assessing  how the year 2000 will  impact both
internal and external non-IT systems,  including product  compliance,  machinery
and equipment, engineering support systems and tools, human resource data bases,
payroll processing,  banking systems,  benefit plan third party  administrators,
and  customer  systems  and vendor  compliance.  The Company has made an initial
assessment  that  products  produced by the  Company,  and  systems  used by the
Company to manufacture products,  are year 2000 compliant;  however, the Company
will  have  to  undertake  a  more   detailed   analysis  of  its  products  and
manufacturing  systems  to  assure  that  year 2000  issues  have been  entirely
addressed.  The Company is in the initial  stages of  questioning  customers and
vendors to determine whether their systems and products are year 2000 compliant.
The Company has not received  sufficient  information to assess whether the lack
of year 2000  compliance  of  customers or vendors  will  materially  impact the
Company's  operations.  The Company  expects  that it will be able to more fully
assess the impact of vendor and/or customer year 2000  compliance  deficiency by
March 31, 1999.  The Company has completed  its initial  assessment of year 2000
compliance of its engineering  support systems and automated  engineering tools.
The  engineering  systems and tools utilized by the Company that are integral to
product  development  schedules are upgraded  annually through license renewals.
The  current   upgrades  of  the  engineering   support  systems  and  automated
engineering  tools are year 2000  compliant.  The  Company is in the  process of
completing its testing of year 2000  compliance of the  engineering  systems and
tools and expects that this  evaluation  will be completed by May 31, 1999,  and
believes that it will have sufficient  time to mitigate any  significant  impact
that the year 2000 compliance will have on the Company's development  schedules,
if any. The Company's human resource database and the payroll processing systems
have been evaluated for year 2000 compliance and must be upgraded in order to be
year 2000  compliant.  The cost of this upgrade will not be significant  and the
Company  anticipates  that this upgrade will be completed by March 31, 1999. The
Company has received  confirmation  that its primary  banks and its benefit plan
third party administrators systems are or will be year 2000 compliant.

         The Company  believes that it is proactive in assessing the impact that
the year 2000 will have on both its internal and external IT and non-IT systems.
Where  material and where  feasible,  the cost of year 2000  compliance has been
quantified.  The Company is at varying  stages of evaluating  the impacts of the
year 2000 on its business and its results of  operations.  The Company  believes
that its actions,  evaluations and processes currently undertaken are sufficient
to assess and  mitigate the impacts that the year 2000 will have on the Company.
However,  since the evaluations described above are, at this time, not complete,
the Company may discover ways in which the lack of year 2000 compliance, whether
by the  Company or by third  parties,  could  materially  affect  the  Company's
operations.

         The  Company is in the  process of  developing  a  contingency  plan to
address  all  possible  effects  that the year 2000 may have on its  operations.
Management  believes that its actions,  evaluations and processes should provide
sufficient  time to  address  the year 2000  risks as they are  revealed.  Risks
related  to  customer  year 2000  noncompliance  are not  within  the  Company's
control,  however,  and therefore,  the  noncompliance  of customer  systems may
materially  adversely impact the Company's  operations.  Year 2000 compliance of
the  Company's  vendors is also not within the control of the Company.  However,
the Company  believes that it will have  sufficient time to mitigate vendor year
2000  noncompliance  and replace  such  vendors  with vendors that are year 2000
compliant due to the general  availability of electrical  component  material in
the Company's products.



<PAGE>



PART II. OTHER INFORMATION

ITEM 5. OTHER EVENTS

         None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   a)    The following  documents  are  furnished  as  an  exhibit  and numbered
pursuant to Item 601 of regulation S-K:

         Exhibit 27:  Financial Data Schedule

   b) The  registrant  was not  required to file any reports on Form 8-K for the
quarter.



                                   SIGNATURES


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


                                           WESTELL TECHNOLOGIES, INC.
                                              (Registrant)

DATE: February 15, 1999
                                              By: ROBERT H. GAYNOR
                                              ROBERT H. GAYNOR
                                              Chairman of the Board of Directors
                                              and Chief Executive Officer


                                              By: STEPHEN J. HAWRYSZ
                                              STEPHEN J. HAWRYSZ
                                              Chief Financial Officer, Vice
                                              President, Secretary and Treasurer