United States

                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q
             [ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the thirteen-week period ended:  December 25, 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: 0-10726

                             C-COR ELECTRONICS, INC.
             (Exact name of registrant as specified in its charter)

              Pennsylvania                          24-0811591
   (State or other jurisdiction of        (I.R.S. Employer  Identification No.)
   incorporation or organization)


60 Decibel Road, State College, PA              16801
(Address of principal executive offices)       (Zip Code)


                            (814) 238-2461
              (Registrant's telephone number, including area code)



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
                                 -----      -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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

Common Stock, $.10 Par Value - 9,111,375 shares as of January 25, 1999.



<PAGE>


                                      INDEX

                             C-COR ELECTRONICS, INC.



PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements (unaudited).

              Condensed  consolidated  balance  sheets  -- June  26,  1998,  and
              December 25, 1998.

              Condensed consolidated  statements of operations -- thirteen weeks
              ended December 25, 1998, and December 26, 1997;  twenty-six  weeks
              ended December 25, 1998, and December 26, 1997.

              Condensed  consolidated  statements  of cash  flows --  twenty-six
              weeks ended December 25, 1998, and December 26, 1997.

              Notes to condensed  consolidated  financial statements -- December
              25, 1998.



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



PART II.  OTHER INFORMATION

Item 4.  Submission of matters to a vote of shareholders.

Item 6.  Exhibits and Reports on Form  8-K.
<PAGE>

<TABLE>
Item 1.  Financial Statements
<CAPTION>

                             C-COR ELECTRONICS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS



                                                             December 25,      June 26,
                                  ASSETS                         1998            1998
                                                             -----------      ----------
                                                             (Unaudited)         (Note)
                                                                     (000's omitted)
<S>                                                          <C>              <C>
CURRENT ASSETS
  Cash and cash equivalents                                  $       210      $   2,313
  Marketable securities                                              399            356
  Accounts receivable                                             22,541         19,404
                                                             -----------      ----------
                                                                  23,150         22,073
                                                             -----------      ----------
  Inventories:
    Raw materials                                                 13,070         12,770
    Work-in-process                                                3,155          1,755
    Finished goods                                                 2,475          2,850
                                                             -----------      ----------
      Total inventories                                           18,700         17,375
                                                             -----------      ----------
  Deferred taxes                                                   3,060          2,797
  Property held for sale, net                                      1,281              0
  Other current assets                                             2,403          2,468
  Net current assets of discontinued operations                        6              0
                                                             -----------      ----------
TOTAL CURRENT ASSETS                                              48,600         44,713
                                                             -----------      ----------
PROPERTY, PLANT, AND EQUIPMENT, NET                               24,969         27,751
INVESTMENT                                                         5,000              0
INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS, NET                  3,415          3,054
                                                             -----------      ----------
TOTAL ASSETS                                                 $    81,984      $  75,518
                                                             ===========      ==========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable and accrued liabilities                   $    17,692      $  16,029
  Line-of-credit                                                   4,012              0
  Current portion of long-term debt                                  757            854
  Net current liabilities of discontinued operations                   0            517
                                                             -----------      ----------
TOTAL CURRENT LIABILITIES                                         22,461         17,400
                                                             -----------      ----------
LONG-TERM DEBT, less current portion                               4,012          5,513
DEFERRED TAXES                                                     1,254          1,374
OTHER LONG-TERM LIABILITIES                                        1,280          1,041
                                                             -----------      ----------
TOTAL LIABILITIES                                                 29,007         25,328
                                                             -----------      ----------
SHAREHOLDERS' EQUITY
  Common Stock, $.10 par; authorized shares 
   24,000,000; issued shares of 9,701,028 on 12/25/98,
   and 9,672,128 on 06/26/98.                                        970            967
  Additional paid-in capital                                      20,620         20,341
  Retained earnings                                               38,444         34,877
  Accumulated other comprehensive loss                               (77)           (99)
  Treasury stock                                                  (6,980)        (5,896)
                                                             -----------      ----------
TOTAL SHAREHOLDERS' EQUITY                                        52,977         50,190
                                                             -----------      ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                     $    81,984      $  75,518
                                                             ===========      ==========


<FN>
Note:  The balance sheet at June 26, 1998, has been derived from audited 
       financial statements at that date.

See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>

<TABLE>
                             C-COR ELECTRONICS, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>


                                                      Thirteen Weeks Ended               Twenty-Six Weeks Ended
                                                December 25,         December 26,    December 25,         December 26,
                                                    1998                1997             1998                1997
                                                -----------          -----------     -----------          -----------
                                                               (000's omitted, except per share data)
<S>                                             <C>                 <C>              <C>                  <C>
 NET SALES                                      $   36,847          $   37,185       $   70,063           $   74,250
                                                -----------          -----------     -----------          -----------

 COSTS AND EXPENSES:
   Cost of sales                                    27,739              29,124           53,364               57,597
   Selling, general and administrative 
     expenses                                        3,819               3,772            7,247                7,327
   Research and product development costs            2,356               1,690            4,418                3,463
   Interest expense                                     55                  76               87                  153
   Investment income                                   (30)                 (6)             (70)                 (13)
   Foreign exchange loss                                15                 165               70                  144
   Other expense (income)                               56                 (34)              23                  289
                                                -----------          -----------     -----------          -----------
                                                    34,010              34,787           65,139               68,960
                                                -----------          -----------     -----------          -----------

 INCOME FROM CONTINUING OPERATIONS 
   BEFORE INCOME TAXES                               2,837               2,398            4,924                5,290

 INCOME TAXES                                          955                 812            1,661                1,823
                                                -----------          -----------     -----------          -----------

 INCOME FROM CONTINUING OPERATIONS                   1,882               1,586            3,263                3,467

 DISCONTINUED OPERATIONS:
 Gain on disposal of discontinued
   business segment, less applicable
   income tax expense                                   16                   0              304                    0
                                                -----------          -----------     -----------          -----------

 NET INCOME                                     $    1,898           $   1,586       $    3,567           $    3,467
                                                ===========          ===========     ===========          ===========

 NET INCOME PER SHARE - (BASIC):

   Continuing operations                        $     0.21           $    0.17       $    0.36            $     0.38
   Discontinued operations                            0.00                0.00            0.03                  0.00 
                                                -----------          -----------     -----------          -----------
 NET INCOME PER SHARE                           $     0.21          $     0.17       $    0.39            $     0.38
                                                ===========          ===========     ===========          ===========

 NET INCOME PER SHARE - (DILUTED):

   Continuing operations                        $     0.20           $    0.17       $    0.35            $     0.37
   Discontinued operations                            0.00                0.00            0.03                  0.00 
                                                -----------          -----------     -----------          -----------
 NET INCOME PER SHARE                           $     0.20          $     0.17       $    0.38            $     0.37
                                                ===========          ===========     ===========          ===========

<FN>
 See notes to condensed consolidated financial statements.
</FN>
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                             C-COR ELECTRONICS, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)



                                                                Twenty-Six Weeks Ended
                                                             December 25,      December 26,
                                                                 1998             1997 
                                                             -----------       -----------
                                                                    (000's omitted)

 <S>                                                         <C>               <C>
 OPERATING ACTIVITIES
 Net Income                                                  $ 3,567           $ 3,467
   Adjustments to reconcile net income to net cash and cash equivalents provided
     by operating activities:
   Depreciation and amortization                               3,707             3,275
   Gain on disposal of discontinued operations,
     net of tax expenses                                        (304)                -
   Provision for deferred retirement salary plan                 239               187
   Loss on sales of property, plant and equipment                 62                 -
   Changes in operating assets and liabilities:
     Accounts receivable                                      (3,137)             (250)
     Inventories                                              (1,325)           (3,060)
     Other assets                                               (310)             (136)
     Accounts payable and accrued liabilities                  1,663             3,205
     Deferred income taxes                                      (380)               29
     Discontinued operations - working capital changes
      and noncash charges                                       (219)             (730)
 NET CASH AND CASH EQUIVALENTS PROVIDED BY                  -----------       -----------
   OPERATING ACTIVITIES                                        3,563             5,987
                                                            -----------       -----------
 INVESTING ACTIVITIES
   Purchase of property, plant and equipment                  (2,228)           (4,625)
   Purchase of marketable securities                             (50)                -
   Proceeds from sale of marketable securities                     -                15
   Investment                                                 (5,000)                -
   Investing activities of discontinued operations                 -                22
 NET CASH AND CASH EQUIVALENTS                              -----------       -----------  
    USED IN  INVESTING ACTIVITIES                             (7,278)           (4,588)
                                                            -----------       -----------
 FINANCING ACTIVITIES
   Payment of debt and capital lease obligations              (4,598)             (415)
   Proceeds from long-term debt borrowing                      3,000                 -
   Proceeds from line-of-credit                                7,114            26,300
   Payment of line-of-credit                                  (3,102)          (27,753)
   Issue common stock to employee stock purchase plan             34                24
   Proceeds from exercise of stock options                       248               134
   Purchase of treasury stock                                 (1,084)                -
 NET CASH AND CASH EQUIVALENTS PROVIDED BY (USED IN)        -----------       -----------
   FINANCING ACTIVITIES                                        1,612            (1,710)
                                                            -----------       -----------
 DECREASE IN CASH AND CASH EQUIVALENTS                        (2,103)             (311)
 Cash and cash equivalents at beginning of period              2,313               452
                                                            -----------       -----------
 CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $   210           $   141
                                                            ===========       ===========
<FN>
 See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
                            C-COR ELECTRONICS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. The accompanying, unaudited, condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information,  and in the opinion of management,  contain all
adjustments  (consisting  only of normal,  recurring  adjustments)  necessary to
fairly present the Company's financial position as of December 25, 1998, and the
results of its operations for the thirteen-week and twenty-six-week periods then
ended.  Operating results for the thirteen-week and twenty-six-week  periods are
not  necessarily  indicative  of the results  that may be expected  for the year
ending June 25, 1999. For further information, refer to financial statements and
footnotes  thereto  included in the Company's annual report on Form 10-K for the
year ended June 26, 1998.

2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

<TABLE>
Accounts payable and accrued liabilities consist of:
<CAPTION>

                                                   December 25,            June 26,
                                                      1998                  1998
                                                ----------------       ----------------
                                                           (000's omitted)
<S>                                                     <C>                    <C>    
Accounts payable                                        $ 8,770                $ 5,784
Accrued incentive plan expense                              475                  1,716
Accrued vacation expense                                  1,522                  1,435
Accrued salary expense                                      665                    719
Accrued salary and sales tax expense                        785                    903
Accrued warranty expense                                  1,782                  1,716
Accrued workers' compensation 
  self-insurance expense                                  1,584                  1,319
Accrued restructuring costs                                   -                    625
Accrued other                                             2,109                  1,812 
                                                ----------------       ----------------
                                                        $17,692                $16,029
                                                ================       ================
</TABLE>

3. COMPREHENSIVE INCOME:

During the quarter ended  September 25, 1998, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income"  (Statement  130),  which is required for fiscal years  beginning  after
December  15,  1997.   Statement   130   establishes   standards  for  reporting
comprehensive  income  and  its  components  in a full  set  of  general-purpose
financial  statements.  The components of accumulated other comprehensive income
(loss), net of tax, of the Company are as follows: <TABLE> <CAPTION>
                                                        December 25,              June 26,
                                                            1998                    1998
                                                         -----------             ----------
                                                                  (000's omitted)
<S>                                                        <C>                      <C>    
Foreign currency translation adjustments                   $   (66)                 $  (92)
Unrealized loss on equity securities                           (11)                     (7)
                                                         ----------              ----------
Accumulated other comprehensive income (loss)              $   (77)                 $  (99)
                                                         ==========              ==========
</TABLE>
The components of comprehensive  income of the Company for the thirteen-week and
twenty-six week periods ended September 25, 1998, and September 26, 1997, are as
follows: <TABLE> <CAPTION>
                                                         Thirteen Weeks Ended                Twenty-Six Weeks Ended
                                                     December 25,       December 26,     December 25,       December 26,
                                                          1998              1997             1998              1997
                                                        --------          --------         --------          --------
                                                                               (000's omitted)
<S>                                                      <C>               <C>              <C>               <C>      
Net income                                               $ 1,898           $ 1,586          $ 3,567           $ 3,467  
Other comprehensive income, net of tax:
    Foreign currency translation adjustments                   1                10               17                21
    Unrealized (loss) gain  on equity securities              (4)                3               (4)                5
                                                         --------         --------          --------         --------
Other comprehensive income                                    (3)               13               13                26
                                                         --------         --------          --------         --------
Comprehensive income                                     $ 1,895           $ 1,599          $ 3,580           $ 3,493
                                                         ========         ========          ========         ========
</TABLE>

4. NET INCOME PER SHARE:

Statement  of  Financial  Accounting  Standards  No. 128,  "Earnings  Per Share"
(Statement 128),  became effective for financial  statements  issued for periods
ending after December 15, 1997. The Company adopted this Statement in the second
quarter  of  fiscal  year  1998  and as  required  has  restated  prior  periods
presented.

Basic  earnings per share are computed  based on the weighted  average number of
common shares outstanding,  excluding any dilutive options and awards.  Dilutive
earnings per share are computed  based on the weighted  average number of common
shares  outstanding plus the dilutive effect of options.  The dilutive effect of
options is calculated  under the treasury  stock method using the average market
price for the  period.  Net  income  per  share is  calculated  for the  periods
presented as follows: <TABLE> <CAPTION>
                                              Thirteen Weeks Ended                     Twenty-Six Weeks Ended
                                       December 26,         December 27,         December 26,         December 27,
                                           1997                 1996                 1997                 1996
                                       ------------         ------------         ------------         ------------
                                                         (000's omitted, except per share data)
<S>                                    <C>                  <C>                  <C>                  <C>
Basic:
Weighted average shares outstanding        9,106                9,148                9,136                9,143
                                       ------------         ------------         ------------         ------------
Total                                      9,106                9,148                9,136                9,143


Income from continuing operations      $   1,882            $   1,586            $   3,263            $   3,467
Gain from discontinued operations             16                    0                  304                    0 
                                       ------------         ------------         ------------         ------------
Net income                             $   1,898            $   1,586            $   3,567            $   3,467
                                       ============         ============         ============         ============

Net income per share
  Continuing operations                $    0.21            $    0.17            $    0.36            $     0.38
  Discontinued operations                   0.00                 0.00                 0.03                  0.00 
                                       ------------         ------------         ------------         ------------
Net income per share                   $    0.21            $    0.17            $    0.39            $     0.38
                                       ============         ============         ============         ============


Diluted:

Weighted average shares outstanding        9,106                9,148                9,136                9,143
Weighted average common stock
  equivalents                                192                  288                  211                  228
                                       ------------         ------------         ------------         ------------
Total                                      9,298                9,436                9,347                9,371

Income from continuing operations      $   1,882            $   1,586            $   3,263            $   3,467
Gain from discontinued operations             16                    0                  304                    0 
                                       ------------         ------------         ------------         ------------
Net income                             $   1,898            $   1,586            $   3,567            $   3,467
                                       ============         ============         ============         ============

Net income per share
  Continuing operations                $    0.20            $    0.17            $    0.35            $    0.37
  Discontinued operations                   0.00                 0.00                 0.03                 0.00 
                                       ------------         ------------         ------------         ------------
Net income per share                   $    0.20            $    0.17            $    0.38            $    0.37
                                       ============         ============         ============         ============


</TABLE>

5. Financial Instruments:

On October 19, 1998, the Company borrowed  $3,000,000 under a term loan facility
with a bank.  The purpose of the loan is to  refinance  the Sunny Day Fund loan,
paid off in August 1998. The loan requires monthly principal payments of $50,000
plus  interest.  The  borrowings  bear  interest  based on a one to three  month
variable rate at London Interbank Offered Rate (LIBOR),  plus 1.15%. The Company
is using a derivative financial instrument to reduce its exposure to market risk
resulting from interest  rates. On October 22, 1998, the Company entered into an
interest  rate  swap  agreement  that  fixes the  interest  rate at 6.14% on the
notional  amount of floating rate debt through  October 21, 2003.  The financial
institution,  as counterparty to the agreement,  will pay the Company a floating
interest  rate based on a one-month  LIBOR  during the term of the  agreement in
exchange for the Company paying the fixed interest rate.  Interest payments will
be made monthly.  The Company is at risk of loss from this swap agreement in the
event of nonperformance  by the counterparty.  The Company believes this risk to
be minimal.

<PAGE>

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

General
The following  discussion addresses the financial condition of the Company as of
December 25,  1998,  and the results of  operations  for the  thirteen-week  and
twenty-six-week  periods ended December 25, 1998, compared with the same periods
of the  prior  year.  This  discussion  should be read in  conjunction  with the
Management's  Discussion and Analysis section for the fiscal year ended June 26,
1998, included in the Company's Annual Report on Form 10-K.

Disclosure Regarding Forward-Looking Statements
Some of the  information  presented in this report  constitutes  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, continuation of increased domestic spending
for  network  upgrades,  the  continuation  of  competitive  pricing  pressures,
anticipated  increased  spending  on  research  and  product  development,   the
continued availability of capital resources, and the Company's ability to assess
the risks of the year 2000 issue with respect to its operations,  and to resolve
them in a timely  manner.  Although the Company  believes its  expectations  are
based on  reasonable  assumptions  within  the  bounds of its  knowledge  of its
business and operations,  there can be no assurance that actual results will not
differ  materially  from its  expectations.  Factors  which could  cause  actual
results to differ from  expectations  include the timing of orders received from
customers,  the gain or loss of  significant  customers,  changes  in the mix of
products  sold,  changes  in the cost and  availability  of parts and  supplies,
fluctuations in warranty costs,  new product  development  activities,  economic
conditions  affecting  domestic and international  markets,  regulatory  changes
affecting  the  telecommunications  industry,  in  general,  and  the  Company's
operations, in particular, competition and changes in domestic and international
demand for the Company's products, and other factors which may impact operations
and  manufacturing.  For  additional  information  concerning  these  and  other
important  factors  which may  cause  the  Company's  actual  results  to differ
materially from  expectations  and underlying  assumptions,  please refer to the
Company's reports filed on Form 10-K and other reports filed with the Securities
and Exchange Commission.

Results of Operations
Net income for the thirteen-week period ended December 25, 1998, was $1,898,000,
which  included  income from  continuing  operations of $1,882,000 and a gain on
disposal of discontinued operations of $16,000, net of tax. This compares to net
income of $1,586,000 for the same period of the prior year, all of which derived
from  continuing  operations.  Net income for the  twenty-six-week  period ended
December  25,  1998,  was  $3,567,000,  which  included  income from  continuing
operations of $3,263,000  and a gain on disposal of  discontinued  operations of
$304,000,  net of tax. This  compares to net income of  $3,467,000  for the same
period of the prior year, all of which derived from continuing operations.

Net  sales  for  the   thirteen-week   period  ended  December  25,  1998,  were
$36,847,000, a decrease of 1% from the prior year's sales of $37,185,000 for the
same period.  The decrease in sales was primarily  attributable to reduced sales
to  international  markets,  primarily  in  Canada  as well as in Asia and Latin
America.  Net  sales for the  thirteen-week  period  ended  December  25,  1998,
increased  11%,  compared  to net  sales  reported  for the  Company's  previous
thirteen-week period ended September 25, 1998. Net sales for the twenty-six-week
period  ended  December 25, 1998,  were  $70,063,000,  a decrease of 6% from the
prior year's sales of  $74,250,000  for the same period,  also  attributable  to
reduced sales to international markets,  primarily in Canada as well as in Asia,
Europe, and Latin America. The reduction of sales to international  markets more
than  offset an increase  in  domestic  sales for the  quarter and  year-to-date
periods.

Domestic sales, as a percentage of total  consolidated  sales,  were 84% for the
quarter  ended  December 25,  1998,  and 87% for the period  year-to-date.  This
compares to 69% for the quarter and 70% year-to-date for the same periods of the
prior year. Sales to domestic  customers  increased 20% during the quarter ended
December 25,  1998,  and 17% for the period  year-to-date,  compared to the same
periods of the prior year.  The Company has seen a steady  demand from  domestic
cable  television  (CATV)  operators for  hybrid/fiber  coax (HFC)  distribution
equipment.  The Company  believes  domestic CATV  operators  continue to upgrade
their  networks,  increasing  capacity  for  delivery  of  improved  services to
subscribers,  which  include  not only  voice and video  requirements,  but also
demands for high-speed data transmission.

International  sales, as a percentage of total consolidated  sales, were 16% for
the quarter ended December 25, 1998, and 13% for the period  year-to-date.  This
compares to 31% for the quarter and 30% year-to-date for the same periods of the
prior year.  Sales to international  customers  decreased 49% during the quarter
ended  December 25, 1998,  and 59% for the period  year-to-date  compared to the
same periods of the prior year.  The  decrease for the quarter and  year-to-date
periods  resulted  primarily from reduced  demand from a customer in Canada.  In
addition,  reduced  sales to Asia and  Latin  America  also  contributed  to the
reduction for the quarter, as well as Europe for the period year-to-date.  These
markets  continue to  represent  distinct  markets for CATV  equipment,  and, in
general, demand can be highly variable.

The Company's  backlog of sales orders at December 25, 1998,  was  approximately
$42.3 million,  consisting of backlog from domestic and international  customers
of 85% and 15%, respectively.  This compared to a backlog of approximately $23.9
million at the end of the previous  fiscal  quarter  ended  September  25, 1998,
consisting of backlog from domestic and international  customers of 78% and 22%,
respectively. The Company booked approximately $55.3 million of new sales orders
during the quarter ended December 25, 1998,  resulting in a  book-to-bill  ratio
for the quarter of 1.50,  compared to 1.00 at the end of the  previous  quarter.
The increased sales order activity  derived  primarily from the domestic market,
as well as Canada and Asia.

Gross profit  percentage for the  thirteen-week  period ended December 25, 1998,
was 24.7%  versus  21.7% for the same  period of the prior  year.  Gross  profit
percentage  for the  twenty-six-week  period ended  December 25, 1998, was 23.8%
versus  22.4% for the same period of the prior year.  The  increase in the gross
profit margin for the quarter and year-to-date periods is a result of changes in
product sales mix and steps the Company has  undertaken  to lower  manufacturing
costs,  which include  increasing  the capacity of the  Company's  manufacturing
facility in Tijuana,  Mexico.  During the  quarter,  the Company  increased  its
capacity by leasing a new 61,900  square foot facility in Tijuana,  Mexico,  and
has completed the transition of its manufacturing  operation to the new facility
from its existing  leased  facility as of November 30,  1998.  Although  pricing
pressures  continue,  the  Company  has  taken  steps to  improve  manufacturing
processes  in order to enhance  efficiency  and  productivity,  and to  redesign
products to enhance manufacturability and reduce material costs.

Selling,  general and administrative expenses for the thirteen-week period ended
December  25,  1998,  were  $3,819,000,  an increase of 1% over the prior year's
total of $3,772,000  for the same period.  Selling,  general and  administrative
expenses  for  the   twenty-six-week   period  ended  December  25,  1998,  were
$7,247,000,  a decrease of 1% over the prior year's total of $7,327,000  for the
same  period.  The  increase  for the  quarter  is due to  various  selling  and
administrative costs, including personnel costs associated with expansion of the
Company's technical customer services business unit.

Research  and  product  development  costs for the  thirteen-week  period  ended
December 25,  1998,  were  $2,356,000,  an increase of 39% over the prior year's
total of $1,690,000 for the same period.  Research and product development costs
for the  twenty-six-week  period ended December 25, 1998,  were  $4,418,000,  an
increase of 28% over the prior year's total of  $3,463,000  for the same period.
The  increases for the quarter and  year-to-date  periods are a result of higher
personnel  costs  and  increased  expenditures  due to the  Company's  continued
investments  in  new  products  and  technologies,   which  include   additional
development costs for the Company's Navicor(TM) platform of products,  and cable
network  management  software  for  network  operators  who need to monitor  and
control their  operations  from a central point.  In accordance with the current
development schedule of the Navicor platform of products and beta tests underway
with the  Company's  cable network  management  system  (CNM(TM)  System 2), the
Company continues to anticipate  production release of these products in several
phases  over the second  half of fiscal year 1999.  Anticipated  new  technology
enhancement   initiatives   are  expected  to  increase   research  and  product
development expenses in future periods.

Interest  expense for the  thirteen-week  period ended  December  25, 1998,  was
$55,000,  a decrease of 28% from the prior  year's  total of  $76,000.  Interest
expense for the  twenty-six-week  period ended December 25, 1998, was $87,000, a
decrease of 43% from the prior year's  total of  $153,000.  The decrease for the
quarter  and  year-to-date  periods,  is a result of a  decrease  in  short-term
borrowings on the Company's  revolving line of credit during the periods,  and a
reduction in long-term  borrowings  resulting  from the payoff of certain  loans
during the previous quarter of the current fiscal year.

Investment  income for the  thirteen-week  period ended  December 25, 1998,  was
$30,000,  an increase from the prior year's total of $6,000.  Investment  income
for the twenty-six-week period ended December 25, 1998, was $70,000, an increase
from the prior  year's  total of  $13,000.  The  increase  for the  quarter  and
year-to-date  periods, is a result of dividends on current marketable securities
and short-term investments of operating cash balances during the periods.

Foreign exchange loss for the thirteen-week  period ended December 25, 1998, was
$15,000,  a decrease of 91% from the prior  year's  total of  $165,000.  Foreign
exchange  loss for the  twenty-six-week  period ended  December  25,  1998,  was
$70,000, a decrease of 51% from the prior year's total of $144,000. The decrease
for the quarter and year-to-date periods is a result of reduced foreign currency
transactions, primarily Canadian dollars, as compared to the prior year.

Other expense for the thirteen-week period ended December 25, 1998, was $56,000.
This  compares to other income of $34,000 for the same period of the prior year.
Other  expense for the  twenty-six-week  period ended  December  25,  1998,  was
$23,000,  as  compared to  $289,000  for the same period of the prior year.  The
increase  in other  expense for the quarter  resulted  primarily  from a loss on
disposal of certain leasehold  improvement costs associated with terminating the
Company's facility lease in Tijuana,  Mexico,  which costs were not transferable
to the  Company's  new leased  facility.  The decrease in other  expense for the
year-to-date period resulted primarily from expense accrued in the first quarter
of the prior year for settlement of certain litigation.

The effective  income tax rate for the  thirteen-week  period ended December 25,
1998,  was 33.7%,  compared to 33.9% for the same period of the prior year.  The
effective  income tax rate for the  twenty-six-week  period  ended  December 25,
1998,  was  33.7%,  compared  to 34.5% for the same  period  of the prior  year.
Fluctuations  in the  effective  income tax rate from period to period,  reflect
changes in non-deductible  amounts, the relative  profitability  related to both
U.S. and non-U.S. operations, and differences in statutory rates.

Results of Discontinued  Operations
On July 10, 1997, the Company announced the discontinuation of its digital fiber
optic business segment located in Fremont,  California,  in a wind-down  process
that was substantially  completed as of the quarter ended March 27, 1998. A gain
from the disposal of the discontinued business segment of $16,000, net of tax of
$32,000,  was recorded during the thirteen-week  period ended December 25, 1998,
resulting  primarily from  royalties  received on licensing of the digital fiber
optics technology. A gain from the disposal of the discontinued business segment
of $304,000,  net of tax of $112,000,  was recorded  during the  twenty-six-week
period ended  December 25, 1998,  resulting  primarily  from the  settlement  of
certain warranty  liabilities and the  aforementioned  royalties  resulting from
licensing the digital fiber optic technology.

Liquidity and Capital Resources
The  Company's  current  ratio at December 25, 1998,  was 2.2 compared to 2.6 at
June 26, 1998. Net cash  generated from operating  activities was $3,563,000 for
the  twenty-six-week  period ended December 25, 1998, compared to $5,987,000 for
the same  period  of the prior  year.  Working  capital  was  $26,139,000  as of
December 25, 1998, compared to $27,313,000 at June 26, 1998.

Net cash used in investing  activities was  $7,278,000  for the  twenty-six-week
period ended  December 25, 1998,  compared to $4,588,000  for the same period of
the prior  year.  The  Company's  investing  activities  derive  primarily  from
purchases of property,  plant and equipment and other investing activities.  The
decrease in cash used in investing activities was primarily due to an investment
made by the  Company in the stock of  Convergence.com.  In  December  1998,  the
Company entered into a strategic  alliance with  Convergence.com,  a provider of
internet-enabling  technical services. Under this arrangement,  C-COR has made a
$5,000,000  investment  in  Convergence.com  and is the  exclusive  reseller  of
Convergence.com's  products  and  services in North  America.  Convergence.com's
products and services enable delivery of high-speed, broadband internet and data
services to businesses,  residential customers,  schools and other institutions.
The  investment  in  Convergence.com  is being carried at cost, as the ownership
interest is less than 20%, and does not fall within the  guidelines of Financial
Accounting  Standards No. 115,  "Accounting for Certain  Investments in Debt and
Equity Securities"  (Statement 115). Purchases of property,  plant and equipment
declined  for the  twenty-six-week  period,  compared  to the same period of the
prior year.

Net  cash  provided  by  financing   activities   totaled   $1,612,000  for  the
twenty-six-week  period ended  December  25, 1998,  compared to net cash used in
financing  activities of $1,710,000  for the same period of the prior year.  The
Company's  financing  activities consist primarily of borrowings and payments on
short-term and long-term debt.

On June 25, 1998, the Company announced the closing of its  manufacturing  plant
located  in  Reedsville,  Pennsylvania,  in order to reduce  costs  and  improve
productivity and asset  utilization.  The Company had a Lease/Option to Purchase
Agreement with the Mifflin County Industrial Development Corporation (MCIDC) for
the building and improvements located in Reedsville,  Pennsylvania.  The Company
was the guarantor of several  borrowing  commitments  by the MCIDC for financing
the facility and  improvements.  On August 10,  1998,  the Company  executed its
option and purchased the facility for approximately $1,454,000, representing the
remaining  outstanding  principal balances of the various loan commitments.  The
Company used its available capital  resources for the purchase.  The Company has
reclassified the net book value of this asset from property, plant and equipment
at June 26,  1998,  to  property  held for sale as of  September  25,  1998.  In
addition, on August 20, 1998, the Company paid off the remaining balances of two
loans  secured  through the  Pennsylvania  Sunny Day Fund.  The loans funded the
expansion and renovation of the Company's State College, Pennsylvania,  facility
in 1995.  The  loan  balances  were  paid  off in  order  to  eliminate  certain
restrictive  covenants  associated  with  the  loan  agreements.  The  principal
balances of the two loans paid off were $409,000 and  $2,506,000,  respectively.
The  Company  used  its  available  capital  resources  to pay  off  the  loans.
Additional  financing  activities for the quarter  resulted from  borrowings and
payments on the Company's line-of-credit and other long-term debt.

On October 19, 1998, the Company borrowed  $3,000,000 under a term loan facility
with a bank.  The purpose of the loan is to  refinance  the Sunny Day Fund loan,
paid off in August 1998. The loan requires monthly principal payments of $50,000
plus  interest.  The  borrowings  bear interest  based on a one- to  three-month
variable rate at London Interbank Offered Rate (LIBOR),  plus 1.15%. The Company
is using a derivative financial instrument to reduce its exposure to market risk
resulting from interest  rates. On October 22, 1998, the Company entered into an
interest  rate  swap  agreement  that  fixes the  interest  rate at 6.14% on the
notional  amount of floating rate debt through  October 21, 2003.  The financial
institution,  as counterparty to the agreement,  will pay the Company a floating
interest  rate based on a one-month  LIBOR  during the term of the  agreement in
exchange for the Company paying the fixed interest rate.  Interest payments will
be made monthly.  The Company is at risk of loss from this swap agreement in the
event of nonperformance  by the counterparty.  The Company believes this risk to
be minimal.

The Company has a stock  repurchase  program which allows it to repurchase up to
500,000  shares of C-COR common stock.  The shares may be purchased from time to
time in the open market through block or privately negotiated  transactions,  or
otherwise.  The Company intends to use its currently available capital resources
to fund the  purchases.  The  repurchased  stock is being held by the Company as
treasury  stock to be used to meet the Company's  obligations  under its present
and future stock option plans and for other corporate  purposes.  As of December
25, 1998, a total of 100,723 shares were repurchased under this stock repurchase
program,  of which 53,780 were  purchased  during the quarter.  The total shares
being held by the  Company as  treasury  stock as of  December  25,  1998,  were
600,723.

The Company  maintains  a  line-of-credit  with a bank  pursuant to which it may
borrow the lesser of $23,000,000 or a percentage of eligible accounts receivable
and  inventory.  The borrowings are  collateralized  by accounts  receivable and
inventory. The Company had borrowings of $4,012,000 on this line-of-credit as of
December  25,  1998.  Based upon the  Company's  analysis of  eligible  accounts
receivable and inventory,  approximately  $16,811,000 was available to borrow as
of December  25, 1998.  This  line-of-credit  agreement  was  committed  through
January  31,  1999,  and  on  January  21,  1999,   the  Company   renewed  this
line-of-credit for $25,000,000, with a sub-limit of $2,000,000 available for the
issuance of letters of credit.  The line-of-credit is committed through December
31, 1999.

Management  believes that  operating  cash flow,  as well as the  aforementioned
financing  source,  will adequately  provide for all cash  requirements  for the
foreseeable future,  subject to requirements that additional growth or strategic
development might dictate.

Year 2000
The  Company  is aware of the  issues  associated  with the  limitations  of the
programming code in many existing computer systems, whereby the computer systems
may not properly  recognize  date-sensitive  information as the millennium (year
2000)  approaches.  The Company's  date-sensitive  systems include,  but are not
limited to, test equipment,  computer systems embedded in production  equipment,
products  containing   computer  systems,   business  data  processing  systems,
production management and planning systems, and personal computers. Systems that
do not properly  recognize such  information  could  generate  erroneous data or
cause a system to fail.

During the thirteen-week period ended December 25, 1998, the Company's Year 2000
project team  (consisting of  representatives  from its information  technology,
finance,  manufacturing,  product development,  quality assurance, and sales and
marketing departments) assessed the Company's internal date-sensitive  equipment
to determine Year 2000 compliance.  The Company has concluded that approximately
75% of the Company's  date-sensitive  equipment is deemed to be compliant or had
only minor  issues.  Another 17%  requires  further  investigation  to determine
compliance,  and  approximately 8% was determined to be  non-compliant.  Most of
these  non-compliant items can be upgraded to be compliant before Year 2000. The
non-compliant  hardware  and  software  were  determined  not to be in  critical
systems.  The Company  will  continue  the  ongoing  process of  evaluating  its
remaining  date-sensitive  equipment for Year 2000  compliance  during the third
quarter of fiscal year 1999.

At this time,  all  critical  systems  have been  designated  compliant by their
manufacturer.  To verify manufacturer's  assertions, the Company has developed a
testing plan for its critical systems,  and will begin compliance testing during
the Company's third quarter of fiscal year 1999.

In  addition,  during the  thirteen-week  period ended  December  25, 1998,  the
Company  corresponded  with its  principal  customers,  suppliers,  vendors  and
subcontractors  to ascertain  their  readiness for the Year 2000,  and requested
assurances  that they are  addressing  the Year 2000  issue.  These  actions are
intended to help  mitigate  the  possible  external  impact of Year 2000 issues.
However, the Company is unable to fully assess the potential consequences in the
event  of  unforeseen  compliance  issues  with  the  systems  operated  by  its
customers, suppliers, vendors or subcontractors.

The Company has assessed its products  presently  being sold and those installed
in customer's  networks.  With the exception of our network  management  system,
there is no inherent  software  embedded in the  Company's  product  offering to
cause a Year 2000  issue.  The  Company  has  assessed  its  network  management
software and firmware,  both present and previously sold versions,  and has also
found them to be Year 2000 compliant.

The  Company's  current  timetable is that it expects to complete its  remaining
Year 2000 risk  assessment and testing by the end of its third quarter of fiscal
year 1999,  however,  there can be no assurance  that the Company will meet this
timetable.

The Company has not calculated the total  estimated cost of addressing Year 2000
issues.  While the total estimated cost of these efforts is difficult to predict
with accuracy,  based on its  evaluation  and  assessment  thus far, the Company
believes there should not be a material adverse impact on its operating  results
or  financial  condition.  However,  Year 2000 issues  could have a  significant
impact on the Company's  operations and its financial  results if  modifications
cannot be completed on a timely basis, if unforeseen needs or problems arise, or
if there are  unforeseen  compliance  problems with the systems  operated by its
customers,  suppliers,  vendors or subcontractors.  Moreover,  the change to the
Year 2000 may negatively impact the Company's  customers or the CATV industry as
a whole,  causing reduced demand and market  disruption in  anticipation  of, or
following, the Year 2000.

Based on its assessment to date, the Company believes it will not experience any
material  disruption  as a  result  of Year  2000  problems  with  its  internal
financial,  manufacturing and other computer  systems.  Upon final completion of
the evaluation of its  date-sensitive  equipment for Year 2000, the Company will
establish  a  contingency  plan  detailing  how it will  operate in the event it
perceives  there  are  unaddressed  risks  associated  with  the Year  2000.  In
addition,  the Company is uncertain as to the most reasonably  likely worst case
scenario,  however, upon completion of its Year 2000 risk assessment and testing
plan, the Company  expects to be able to ascertain the effects of such scenario,
and to develop a remedial plan.

<PAGE>

PART II. OTHER INFORMATION


Item 4.  Submission of matters to a vote of shareholders

The Company's  annual meeting of  shareholders  was held on October 13, 1998, at
which the holders of  7,541,037  shares of common stock of the Company (out of a
total of  9,157,124  shares  outstanding  and  entitled  to vote at such  annual
meeting),  were present in person or represented by proxy (representing a quorum
for the  transaction of business).  The election of four directors was submitted
to a vote of shareholders.

Mr. John J. Omlor,  Dr. James J. Tietjen,  and Ms. Anne P. Jones were re-elected
as  directors  of the Company  until the year 2001,  and Mr. David A. Woodle was
elected as a director until the year 1999.

The voting results for the election of directors are set forth as follows:
<TABLE>

<S>                        <C>                   <C>   
Name of Nominee            Votes For             Votes Withheld

Anne P. Jones              7,441,817             99,220
Dr. James J. Tietjen       7,442,007             99,030
John J. Omlor              7,442,007             99,030
David A. Woodle            7,441,842             99,195
</TABLE>


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

         The following exhibits are included herein:

         (11)     Statement re: computation of earnings per share
         (27)     Financial Data Schedule

         Reports on Form 8-K

                  None



<PAGE>






                                   SIGNATURES


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


                             C-COR ELECTRONICS, INC.
                                              (Registrant)



Date:     February 5, 1999                    /s/ WILLIAM T. HANELLY
      -----------------------                 --------------------------
                             Vice President-Finance,
                             Secretary and Treasurer
                          (Principal Financial Officer)




Date:     February 5, 1999                    /s/ JOSEPH E. ZAVACKY
      -----------------------                 ---------------------------
                                              Controller and Assistant Secretary
                         (Principal Accounting Officer)