SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                            FORM 10 Q
                                
(Mark One)

/XX/QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
                                
     For the quarterly period ended December 27, 1998

/  /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:  0-19717

                         WPI GROUP, INC.
                         ---------------
     (Exact name of registrant as specified in its charter)
                                
     NEW HAMPSHIRE                      02-0218767
     -------------                      ----------
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)           Identification Number)


1155 Elm Street, Manchester, New Hampshire         03101
------------------------------------------         -----
(Address of principal  executive offices)          (Zip Code)


Registrant's telephone number including area code: (603)627-3500
                                                   -------------
-------------------------------------------------------------------         
(Former name, former address, and former fiscal year, if changed
 since last report)
                                
Check whether the registrant (1) has filed all reports required
to be  filed by Section 13 or 15(d) of the Exchange Act during
the past 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 issuers involved in bankruptcy proceedings
during the preceding five years:

Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by the court.
Yes     No
   ---    ---
Applicable only to corporate issuers:

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:

          Class                  Outstanding as of January 26,1999
          -----                  ---------------------------------
Common Stock, par value $.01              6,044,090 shares

<PAGE>
                                      
                         WPI GROUP, INC.
                                
                                
                             INDEX
                             -----   
                                                     Page No.
                                                     --------
PART I - FINANCIAL INFORMATION                    
  Item 1. Consolidated Financial Statements       
                                                  
         Consolidated Balance Sheets                     3
         - December 27,1998 and September 27,1998 
                                                  
         Consolidated Statements of Income               4
         - Three months ended December 27,1998    
           and December 28,1997
                                                  
         Consolidated Statements of Cash Flows           5
         - Three months ended December 27,1998    
           and December 28,1997
                                                  
         Notes to Consolidated Financial                 
         Statements                                      6
                                                  
  Item 2. Management's Discussion and Analysis of 
          Financial Condition and Results of Operations  7                    
                                                  
PART II - OTHER INFORMATION                       
                                                  
  Item 6. Exhibits and Reports on Form 8-K               8
                                                  
SIGNATURES                                               9
                               -2-
<PAGE>                                
<TABLE>

                         WPI GROUP, INC.
                                
                   CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                
                                            September 27,    December 27,
                                                1998            1998
                                            -------------    ------------   
                                                             (unaudited)
<S>                                        <C>              <C>

ASSETS                                                 
                                                       
CURRENT ASSETS                                         
                                                       
  Cash and cash equivalents                 $     159,518    $     47,300     
  Accounts receivable - net of                     
  allowance for doubtful accounts of
  $1,283,000 and $1,302,000,        
  respectively                                 21,123,792      20,176,582
  Accounts receivable - other                     270,611         279,906
  Inventories                                  14,188,286      15,210,104
  Prepaid expenses and other current       
  assets                                        1,562,048       2,014,097
  Prepaid income taxes                          2,551,616       2,551,459
  Refundable income taxes                         620,578         713,750
                                            -------------    ------------

      Total current assets                     40,476,449      40,993,198
                                                   
PROPERTY, PLANT AND EQUIPMENT                      
  at cost, less accumulated                
  depreciation                                 15,514,291      15,440,814
OTHER ASSETS                                   54,132,417      53,811,143
                                            -------------    ------------   
                                            $ 110,123,157    $110,245,155
                                            =============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
                                                       
CURRENT LIABILITIES
  Current portion of long-term debt         $   3,715,748    $  3,715,748
  Accounts payable                              7,776,470       6,685,453
  Accrued expenses                              5,985,304       4,980,552
  Accrued income taxes                          1,672,166       1,601,421
                                            -------------    ------------

       Total current liabilities               19,149,688      16,983,174
                                            -------------    ------------       
LONG-TERM DEBT                                 62,638,964      65,436,249
                                            -------------    ------------       
DEFERRED INCOME TAXES                           3,091,995       3,100,135
                                            -------------    ------------       
COMMITMENTS                                        
STOCKHOLDERS' EQUITY:                              
   Common stock, $.01 par value;                   
   authorized 20,000,000 shares;
   issued and outstanding 6,028,204
   and 6,037,024, respectively.                    60,282          60,370
   Additional paid-in capital                  14,169,771      14,201,882
   Retained earnings                           10,418,044      10,142,566
   Cumulative foreign currency              
   translation adjustments                        594,413         320,779
                                            -------------    ------------

         Total stockholders' equity            25,242,510      24,725,597
                                            -------------    ------------

                                            $ 110,123,157    $110,245,155
                                            =============    ============       
</TABLE>
                                
                See notes to financial statements
                               -3-
<PAGE>
<TABLE>
                         WPI GROUP, INC.
                CONSOLIDATED STATEMENTS OF INCOME
                           (unaudited)
<CAPTION>

                                                Three Months Ended
                                            December 28,     December 27,
                                               1997             1998
                                            -------------    -------------
<S>                                        <C>              <C>

NET SALES                                   $  21,970,619    $ 24,198,004
                                                     
COST OF GOODS SOLD                             13,171,676      13,900,846
                                            -------------    ------------

GROSS PROFIT                                    8,798,943      10,297,158
                                            -------------    ------------     
                                                     
OPERATING EXPENSES:                                  
  Research and new product development          1,182,467       1,423,444
  Selling, general and administration           5,418,610       7,267,678
  Restructuring costs                               -             422,697
                                            -------------    ------------

      Total operating expenses                  6,601,077       9,113,819
                                            -------------    ------------

OPERATING INCOME                                2,197,866       1,183,339
                                                   
OTHER INCOME (EXPENSE):                              
 Interest expense                                (849,516)     (1,451,367)
 Default interest expense                            -           (327,695)
 Foreign currency exchange gain (loss)            (22,162)        146,796
 Other, net                                        14,458          18,449
                                            -------------    ------------     
INCOME (LOSS)BEFORE PROVISION FOR                          
INCOME TAXES                                    1,340,646        (430,478)
                                                     
PROVISION (BENEFIT) FOR INCOME TAXES              429,000        (155,000)
                                            -------------    ------------

NET INCOME (LOSS)                           $     911,646    $   (275,478)
                                            =============    ============

BASIC EARNINGS (LOSS) PER SHARE:            $        0.15    $      (0.05)
                                            =============    ============
                                                     
DILUTED EARNINGS (LOSS) PER SHARE:          $        0.15    $      (0.05)                                            
                                            =============    ============

Weighted Average Common Shares                  6,006,298       6,030,804
                                                     
Effect of dilutive options                        247,848          88,796
                                            -------------    ------------

Adjusted Weighted Average Common Shares         6,254,146       6,119,780
                                            =============    ============     
</TABLE>

                                
                See notes to financial statements
                              - 4 -

<PAGE>
<TABLE>
                                
                         WPI GROUP, INC.
              CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (unaudited)
<CAPTION>
                                                Three Months Ended
                                            December 28,     December 27,
                                               1997             1998
                                            -------------    ------------
<S>                                       <C>              <C>   

CASH FLOWS FROM OPERATING ACTIVITIES:               
   Net income (loss)                        $     911,646    $   (275,478)
                                            -------------    ------------
   Adjustments to reconcile net income              
   to net cash provided by operating
   activities:
   Depreciation and amortization                1,238,627       1,594,409
   Deferred income taxes                            -               9,815
   Changes in current assets and
   liabilities net of assets
   acquired:
   Accounts receivable                         (3,941,883)        753,362
   Accounts receivable - other                    (97,366)         (9,137)
   Inventories                                    169,875      (1,116,733)
   Prepaid expenses, other current         
   assets, and refundable income taxes            566,568        (562,691)
   Accounts payable                              (240,864)     (1,013,029)
   Accrued expenses                              (168,886)       (728,050)
   Accrued income taxes                           348,445         (36,743)
                                            -------------    ------------

        Total adjustments                      (2,125,484)     (1,108,797)
                                            -------------    ------------

   Net cash used in
   operating activities                        (1,213,838)     (1,384,275)
                                            -------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:               
   Increase in long-term debt                   1,335,000       2,797,285
   Proceeds from issuance of common
   stock                                           33,855          25,799
   Proceeds from exercise of stock         
   options                                         47,844           6,400
                                            -------------    ------------

      Net cash provided by        
      financial activities                      1,416,699       2,829,484
                                            -------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:               
   Additions to property, plant and        
   equipment                                     (243,651)       (712,529)
   Additions to other assets                     (619,239)       (620,628)
   Payments of accrued acquisition
   costs                                            -            (211,041)
                                            -------------    ------------

      Net cash used in investing
      activities                                 (862,890)     (1,544,198)
                                            -------------    ------------

EFFECT OF FOREIGN CURRENCY TRANSLATION        
ON CASH                                            34,262         (13,229)
                                            -------------    ------------

NET DECREASE IN CASH AND                          
CASH EQUIVALENTS                                 (625,767)       (112,218)
                                                    
CASH AND CASH EQUIVALENTS,                          
BEGINNING OF PERIOD                               678,799         159,518
                                            -------------    ------------

CASH AND CASH EQUIVALENTS,                          
END OF PERIOD                               $      53,032    $     47,300
                                            =============    ============

SUPPLEMENTAL DISCLOSURE OF CASH                     
INFORMATION:                                        
   Income taxes paid                                -              55,000
   Interest paid                                  804,558       1,325,605

</TABLE>

                See notes to financial statements
                                 - 5 -

<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
1.   BASIS OF PRESENTATION

  The  financial  statements for the three months ended  December
  27,  1998  and December 28,1997 are unaudited and  include  all
  adjustments which, in the opinion of management, are  necessary
  to  present  fairly the results of operations for  the  periods
  then  ended.   All  such adjustments are of a normal  recurring
  nature.    These  financial  statements  should  be   read   in
  conjunction  with  the financial statements and  notes  thereto
  included  in the Company's Form 10-K filed with the  Securities
  and  Exchange  Commission  (File No. 0-19717),  which  included
  financial statements for the years ended September 27,1998  and
  September 28,1997.

  Certain prior year amounts have been reclassified to conform
  with current year presentation.

  The  results of the Company's operations for any interim period
  are  not necessarily indicative of the results of the Company's
  operations  for any other interim period or for a  full  fiscal
  year.
  
<TABLE>
  
2.   INVENTORIES
<CAPTION>
                                                                                
                                            September 27,    December 27,
       Inventory consists of:                   1998            1998
                                            -------------    ------------
       <S>                                 <C>             <C>
         
       Raw Materials                        $   7,684,405    $  7,571,425
       Work in Process                          4,758,535       5,502,320
       Finished Goods                           1,745,346       2,136,359
                                            -------------    ------------

           Total                            $  14,188,286    $ 15,210,104
                                            =============    ============    
</TABLE>
  
                              - 6 -
<PAGE>

                             ITEM 2.
                                
   Management's Discussion and Analysis of Financial Condition
                    and Results of Operations
  
  
  The following discussion and analysis by management is
  provided to identify certain significant factors that affected
  the Company's financial position and operating results during
  the periods included in the accompanying financial statements.
  
  
  RESULTS OF OPERATIONS
  
  Net sales of $24.2 million for the first quarter of fiscal
  1999 increased 10% from sales of $22.0 million for the
  first quarter of fiscal 1998.  The increase was due
  to the acquisition of WPI Instruments.
  
  Cost of sales of $13.9 million for the first quarter of
  fiscal 1999 resulted in a gross profit of 43%, compared to
  a gross profit of 40%  for the same period of fiscal 1998.
  The increase in the Company's gross profit percentage in
  fiscal 1999 was primarily attributable to a change in the mix
  of products sold and increased software licenses revenue.  
  
  Research and new product development expenses increased to
  $1.4  million, compared to $1.2 million for the same three month
  period in fiscal 1998.  The increase was attributed to the
  acquisition discussed above. Research and new product
  development expenses were 6% and 5% of net sales for
  the quarters ended December 27, 1998 and December 28, 1997,
  respectively.
  
  As a percentage of net sales, selling, general and
  administrative expenditures were 30% and 25%  for the
  quarters ended December 27, 1998 and December 28, 1997,
  respectively.  Actual expenditures increased to $7.4
  million from $5.4 million for the first quarter of fiscal
  1998.  The increase in selling, general and administrative
  expenses as a percentage of sales in fiscal 1999 was
  primarily attributable to the acquisition discussed above
  and higher payroll related expenses.

  Operating income for the first quarter of fiscal 1999 decreased
  46% to $1.2 million from $2.2 millon for the first quarter of
  fiscal 1998.  The decrease in operating income was primarily due
  to the increase in selling, general and administration expenses
  discussed above and the restructuring costs incurred to date in
  connection with the Company's reorganization of its Information
  Solutions and Information Technology Groups.

  The Company recorded a loss before provision for income taxes of
  ($.4) million for the three months ended December 27, 1998 compared
  to income of $1.3 million  for the three months ended December 28,
  1997. The decrease was primarily due to weaker sales for the Industrial
  Technology Group and in Europe and the Company's reorganization
  discussed above.
  
  The Company's estimated effective combined federal and state income
  tax rates, as a percentage of pre-tax income, were 36%  and 32%
  for the three months ended December 27, 1998 and December 28,1997,
  respectively. The increase in the Company's fiscal 1999 estimated
  effective tax rates reflects a reduction in anticipated
  foreign tax benefits.
  
  
  LIQUIDITY AND CAPITAL RESOURCES
  
  The Company had working capital of $24.0 million at December
  27, 1998 compared to $21.3 million at September 27, 1998.
  
  The  Company's  management believes it has  sufficient  working
  capital to meet its liquidity needs.
  
  As   of   December  27,  1998,  the  Company  had  no  material
  commitments for capital expenditures.
  
  
                                
                              - 7 -
<PAGE>

  SEGMENT INFORMATION
  
  The Company's business segments are:
  
  Information Solutions: rugged, handheld passive and
  programmable terminals and computers, vehicle diagnostic
  information systems and decision support systems.
  
  Industrial Technology:  power systems, electronics, solenoids,
  avionic components, inertial sensors and panel meters.
  
  Summarized below are the Company's segment sales and operating
  income by business segment for the three months ended December
  27, 1998 and December 28, 1997 in thousands.
  
<TABLE>
<CAPTION>
  
                                               Three Months Ended
                                            December 28,     December 27,
                                               1997             1998
                                            ------------     ------------
 <S>                                       <C>             <C>   
  
  Net Sales                       
     Information Solutions                  $     16,277     $     15,160
     Industrial Technology                         5,694            9,038
                                            ------------     ------------     
                                            $     21,971     $     24,198
                                            ============     ============

  <S>                                      <C>              <C>

   Operating Income
     Information Solutions                  $      2,671     $      2,414
     Industrial Technology                           793              902
     Corporate (a)                                (1,266)          (2,133)
                                            ------------     ------------
                                            $      2,198     $      1,183
                                            ============     ============

  (a) Includes corporate expenses, amortization of goodwill, and
      restructuring costs.
                                
</TABLE>
                                
                                
                              - 8 -
<PAGE>

                         WPI GROUP, INC.
                                
                   PART II - Other Information
                                
                                
                                
  Item 6.   Exhibits and Reports on Form 8-K
  
          A.   Exhibits
               
               27   Financial Data Schedule.
          
          B.   Reports on Form 8-K

               None
          
                                
                              - 9 -

<PAGE>

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



                         WPI GROUP, INC.
                          (Registrant)
                                
                                
                                
                                
Date: February 10,1999                   By:/s/John R. Allard
                                            ------------------- 
                                            John R. Allard
                                            President and
                                            Chief Operating Officer









Date: February 10,1999                   By:/s/John W. Powers
                                            -----------------
                                            John W. Powers
                                            Vice President and
                                            Chief Financial Officer





                             - 10 -