<PAGE 1>
               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                  FORM 10-Q

(Mark One)
  /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the quarterly period ended December 29, 1996, OR

  / /  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
       EXCHANGE ACT OF 1934

For the transition period ended  __________________  or  __________________

Commission File Number 0-15323

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


             Delaware                               94-2904044
  (State or other jurisdiction                   (I.R.S. Employer
        of incorporation or                   Identification Number)
           organization)

                             800 Saginaw Drive
                          Redwood City, CA  94063
                              (415) 366-4400
           (Address, including zip code, and telephone number
                  including area code, of registrant's
                      principal executive offices)


     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     
                                  -----     -----

     The number of shares outstanding of the registrant's Common Stock, $.01 
par value, on December 29, 1996 was 20,926,680.
					

This document consists of 14 pages of which this is page 1.


<PAGE 2>

                      NETWORK EQUIPMENT TECHNOLOGIES, INC.



                                    INDEX

                                                                       Page
                                                                      Number
                                                                      ------

PART I.  Financial Information

   Item 1.  Financial Statements

      Condensed Consolidated Balance Sheets -
      December 29, 1996 and March 31, 1996 .........................     3

      Condensed Consolidated Statements of Income - Quarter and Nine
      Months Ended December 29, 1996 and December 24, 1995 .........     4

      Condensed Consolidated Statements of Cash Flows - Nine Months
      Ended December 29, 1996 and December 24, 1995 ................     5

      Notes to Condensed Consolidated Financial Statements .........     6

   Item 2.  Management's Discussion and Analysis of
            Results of Operations and Financial Condition ..........     7

PART II.  Other Information

   Item 6.  Exhibits and Reports on Form 8-K .......................    12

SIGNATURE  .........................................................    13

EXHIBIT 11  Computation of Primary and Fully Diluted
            Earnings Per Share .....................................    14


<PAGE 3>

                     NETWORK EQUIPMENT TECHNOLOGIES, INC.
                    Condensed Consolidated Balance Sheets
                           (dollars in thousands)

<TABLE>
<CAPTION>

                                                                  December 29,      March 31,
                                                                      1996            1996
                                                                  (unaudited)
                                                                   ---------        ---------
<S>                                                                 <C>              <C>
Assets  
Current assets:
     Cash and cash equivalents                                      $ 34,280         $ 52,319
     Temporary cash investments                                       86,092           59,892
     Accounts receivable, net of allowances of $4,056 at
        December 29 and $4,533 at March 31                            87,381           76,966
     Inventories                                                      24,336           31,705
     Deferred income taxes                                            11,936           11,830
     Prepaid expenses and other assets                                 7,062            5,714
                                                                    --------         --------
          Total current assets                                       251,087          238,426
Property and equipment, net                                           29,113           31,040
Software production costs, net                                         4,370            4,146
Other assets                                                           8,837            8,345
                                                                    --------         --------
                                                                    $293,407         $281,957
                                                                    --------         --------
                                                                    --------         --------

Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable                                               $ 20,539         $ 21,559
     Accrued liabilities                                              39,198           42,442
                                                                    --------         --------
          Total current liabilities                                   59,737           64,001
7-1/4% convertible subordinated debentures                            28,821           33,526
Stockholders' equity:
     Preferred stock, $.01 par value
          Authorized:  5,000,000 shares,
          Outstanding:  none                                             -                - 
     Common stock, $.01 par value
          Authorized:  50,000,000 shares
          Outstanding:  20,927,000 shares at December 29 and
                        20,839,000 shares at March 31                    209              208
     Additional paid-in capital                                      171,171          166,014
     Treasury stock                                                   (2,935)            (600)  
     Net unrealized gain (loss) on available-for-sale securities          73              (12)
     Accumulated translation adjustment                                 (107)            (931)
     Retained earnings                                                36,438           19,751
                                                                    --------         --------
          Total stockholders' equity                                 204,849          184,430
                                                                    --------         --------
                                                                   $ 293,407        $ 281,957
                                                                    --------         --------
                                                                    --------         --------

</TABLE>

See Notes to Condensed Consolidated Financial Statements.

<Page 4>

                     NETWORK EQUIPMENT TECHNOLOGIES, INC.
                 Condensed Consolidated Statements of Income
             (in thousands, except per share amounts - unaudited)

<TABLE>
<CAPTION>
                                                          Quarter Ended            Nine Months Ended
                                                       Dec. 29,    Dec. 24,      Dec. 29,    Dec. 24,
                                                         1996        1995          1996        1995
                                                       --------    --------      --------    --------
<S>                                                    <C>         <C>           <C>         <C>
Revenue:
     Product revenue                                   $ 56,096    $ 58,602      $157,831    $161,583
     Service and other revenue                           27,206      25,959        80,338      85,545
                                                       --------    --------      --------    --------
          Total revenue                                  83,302      84,561       238,169     247,128
                                                       --------    --------      --------    --------

Cost of sales:
     Cost of product revenue                             23,586      23,361        66,685      64,671
     Cost of service and other revenue                   17,988      17,529        52,558      58,498
                                                       --------    --------      --------    --------
          Total cost of sales                            41,574      40,890       119,243     123,169
                                                       --------    --------      --------    --------

Gross margin                                             41,728      43,671       118,926     123,959

Operating expenses:
     Sales and marketing                                 20,061      18,612        57,278      54,720
     Research and development                            10,015       9,456        30,393      26,323
     General and administrative                           2,914       2,805         8,573       8,845
                                                       --------    --------      --------    --------
          Total operating expenses                       32,990      30,873        96,244      89,888
                                                       --------    --------      --------    --------

Income from operations                                    8,738      12,798        22,682      34,071

Other income (expense):
     Interest income                                      1,365       1,410         4,363       4,230
     Interest expense                                      (537)     (1,494)       (1,779)     (4,151)
     Other                                                 (130)        (75)         (309)       (173)
                                                       --------    --------      --------    --------

Income before income taxes                                9,436      12,639        24,957      33,977

Income tax provision                                     (2,816)     (4,424)       (8,714)    (11,892)
                                                       --------    --------      --------    --------

Income before extraordinary gain                          6,620       8,215        16,243      22,085

Extraordinary gain on repurchase of debentures              -           -             444         -   
                                                       --------    --------      --------    --------

Net income                                             $  6,620    $  8,215      $ 16,687    $ 22,085
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------

Primary earnings per share: 
     Income before extraordinary gain                  $    .31    $    .39      $    .76    $   1.07
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------
     Net income                                        $    .31    $    .39      $    .78    $   1.07
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------

Fully diluted earnings per share: 
     Income before extraordinary gain                  $    .31    $    .39      $    .75    $   1.07
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------
     Net income                                        $    .31    $    .39      $    .77    $   1.07
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------

Shares used in computation:
     Primary                                             21,408      21,199        21,437      20,587
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------
     Fully diluted                                       21,534      21,199        21,614      20,643
                                                       --------    --------      --------    --------
                                                       --------    --------      --------    --------

</TABLE>

See Notes to Condensed Consolidated Financial Statements.


<Page 5>

                     NETWORK EQUIPMENT TECHNOLOGIES, INC.
               Condensed Consolidated Statements of Cash Flows
                         (in thousands - unaudited)

<TABLE>
<CAPTION>
                                                                               Nine Months Ended
                                                                             Dec. 29,     Dec. 24,   
                                                                               1996         1995
                                                                             --------     --------
<S>                                                                          <C>          <C> 
Cash and Cash Equivalents at Beginning of Period                             $ 52,319     $ 33,886
                                                                             --------     --------
Net Cash Flows from Operating Activities:
     Net income                                                                16,687       22,085
     Adjustments to reconcile net income to cash 
       provided by operations:
          Extraordinary credit--gain on repurchase of debentures                 (444)         - 
          Depreciation and amortization                                        12,830       11,594
          Restricted stock compensation                                           297          269
          Changes in assets and liabilities:
               Accounts receivable                                             (9,477)     (16,444)
               Inventories                                                      7,571       (2,559)
               Prepaid expenses and other assets                               (1,482)      (1,901)
               Accounts payable                                                (1,113)       3,236
               Accrued liabilities                                             (2,212)       7,578
                                                                             --------     --------
          Net cash provided by operations                                      22,657       23,858
                                                                             --------     --------

Cash Flows from Investing Activities:
     Purchases of temporary cash investments                                 (117,929)     (63,560)
     Proceeds from maturities of temporary cash investments                    91,814       58,163
     Purchases of property and equipment                                       (8,863)     (10,823)
     Additions to software production costs                                    (1,957)      (1,056)
     Other                                                                       (357)         961
                                                                             --------     --------
          Net cash used for investing activities                              (37,292)     (16,315)
                                                                             --------     --------

Cash Flows from Financing Activities:
     Sale of common stock                                                       3,614       10,268
     Repurchase of common stock                                                (2,722)     (10,117)    
     Repayments of borrowings                                                  (3,869)         -
                                                                             --------     --------
          Net cash provided by (used for) financing activities                 (2,977)         151
                                                                             --------     --------

Effect of exchange rate changes on cash                                          (427)         452
                                                                             --------     --------

               Net increase (decrease) in cash and cash equivalents           (18,039)       8,146
                                                                             --------     --------

Cash and Cash Equivalents at End of Period                                   $ 34,280     $ 42,032
                                                                             --------     --------
                                                                             --------     --------

Other Cash Flow Information:
     Cash paid for:
          Interest                                                           $  2,396     $  4,162
          Income taxes                                                       $  4,252     $  5,215
     Non-cash investing and financing activities:
          Conversion of convertible subordinated debentures to common stock
             (including accrued interest and debenture offering costs)       $    -       $ 25,533
          Income tax benefit arising from employee stock option plans        $  1,634     $ 10,996

</TABLE>

See Notes to Condensed Consolidated Financial Statements.


<Page 6>

                     NETWORK EQUIPMENT TECHNOLOGIES, INC.
            Notes to Condensed Consolidated Financial Statements


1.   Basis of Presentation

     The consolidated financial statements include the accounts of the Company 
     and its subsidiaries.  Intercompany accounts and transactions have been 
     eliminated.  In the opinion of management, the accompanying unaudited 
     condensed consolidated financial statements contain all adjustments 
     (consisting only of normal recurring adjustments) considered necessary to 
     present fairly the financial position as of December 29, 1996, and the 
     results of operations and cash flows for the quarter and nine months 
     ended December 29, 1996 and December 24, 1995.  These financial 
     statements should be read in conjunction with the March 31, 1996 audited 
     consolidated financial statements and notes thereto.  The results of 
     operations for the nine months ended December 29, 1996 are not 
     necessarily indicative of the results to be expected for the fiscal year 
     ending March 31, 1997.


2.   Inventories

     Inventories consist of (in thousands):
     <TABLE>
     <CAPTION>
                                                 December 29,    March 31,
                                                     1996          1996
                                                 (unaudited)
                                                   --------      --------
     <S>                                           <C>           <C>
     Purchased components                          $  7,276      $ 14,381
     Work-in-process                                 14,231        15,533
     Finished goods                                   2,829         1,791
                                                   --------      --------
                                                   $ 24,336      $ 31,705
                                                   --------      --------
                                                   --------      --------
</TABLE>


3.   Earnings Per Share

     Net income per share has been computed based upon the weighted average 
     number of common and common equivalent shares outstanding.  For primary 
     earnings per share, common equivalent shares consist of the incremental 
     shares issuable upon the assumed exercise of dilutive stock options.  For 
     fully diluted earnings per share, common equivalent shares also include, 
     if dilutive, the effect of incremental shares issuable upon the 
     conversion of the 7-1/4% convertible subordinated debentures, and net 
     income is adjusted for the interest expense (net of income taxes) related 
     to the debentures.


4.   Recently Issued Accounting Standard

     In October 1995, the Financial Accounting Standards Board issued 
     Statement of Financial Accounting Standards No. 123, "Accounting for 
     Stock-Based Compensation" ("SFAS 123").  This standard defines a fair 
     value method of accounting for stock-based employee compensation plans.  
     Under this method, compensation cost is measured based on the fair value 
     of the stock award when granted and is recognized as an expense over the 
     service period.  This standard became effective for the Company on April 
     1, 1996 and will require measurement of awards made beginning April 1, 
     1995.  The Company has adopted the disclosure-only alternative, and, 
     accordingly, SFAS 123 will have no impact on the Company's results of 
     operations or financial position.


5.   Reclassification

     Certain fiscal 1996 amounts have been reclassified to conform with fiscal 
     1997 presentation.


<Page 7>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION


This discussion and analysis should be read in conjunction with Management's 
Discussion and Analysis in the Company's 1996 Annual Report to Shareholders 
and Part I of the Company's Form 10-K for the fiscal year ended March 31, 
1996.

This Form 10-Q generally, and the following discussion and analysis by 
management in particular, contains forward-looking statements.  These forward-
looking statements are subject to risks and uncertainties.  Actual results may 
differ materially from such forward-looking statements as a result of risks 
and uncertainties, including those described below and others as set forth in 
the Company's fiscal 1996 Form 10-K and other reports filed with the 
Securities and Exchange Commission.


RESULTS OF OPERATIONS

The following table depicts selected data derived from the Company's 
Consolidated Statements of Income expressed as a percentage of revenue for the 
periods presented:

<TABLE>
<CAPTION>

                                             Quarter Ended        Nine Months Ended
                                          ------------------     ------------------
                                          Dec. 29,  Dec. 24,     Dec. 29,  Dec. 24,
Percent of Revenue                          1996      1995         1996      1995
-----------------------------------------------------------------------------------
<S>                                         <C>       <C>          <C>       <C>
Product revenue                              67.3      69.3         66.3      65.4
Service and other revenue                    32.7      30.7         33.7      34.6
                                            -----     -----        -----     -----
     Total revenue                          100.0     100.0        100.0     100.0
                                            -----     -----        -----     -----

Product revenue gross margin                 58.0      60.1         57.7      60.0
Service and other revenue gross margin       33.9      32.5         34.6      31.6
                                            -----     -----        -----     -----
     Total gross margin                      50.1      51.6         49.9      50.2
                                            -----     -----        -----     -----

Sales and marketing                          24.1      22.0         24.0      22.1
Research and development                     12.0      11.2         12.8      10.7
General and administrative                    3.5       3.3          3.6       3.6
                                            -----     -----        -----     -----
     Total operating expenses                39.6      36.5         40.4      36.4
                                            -----     -----        -----     -----

Income from operations                       10.5      15.1          9.5      13.8
                                            -----     -----        -----     -----

Net income                                    7.9       9.7          7.0       8.9
                                            -----     -----        -----     -----
                                            -----     -----        -----     -----
</TABLE>

Revenue

Total revenue for the third quarter and first nine months of fiscal 1997 
decreased 1.5% and 3.6%, respectively, from the comparable periods of fiscal 
1996.  Product revenue for the third quarter and first nine months of fiscal 
1997 decreased $2.5 million, or 4.3%, and $3.8 million, or 2.3%, respectively, 
from the comparable periods of the prior year.  These decreases in product 
revenue were a result of a 20.6% decrease in domestic product sales, which 
includes sales through our U.S. Federal channel, offset partially by increased 
product sales in both the Asia Pacific/Latin American (APLA) and European 
regions.  On a year-to-date basis, product sales in the APLA region have 
increased 73.3%.  Overall international product sales increased 62.4% for the 
quarter and 34.8% year-to-date.

<Page 8>

Service and other revenue increased $1.2 million for the third quarter and 
decreased $5.2 million for the first nine months of fiscal 1997 from the 
comparable periods of fiscal 1996.  The quarter-over-quarter increase was 
primarily a result of increased service revenues.  The year-over-year decrease 
as due to a decrease in revenue from systems integration services in support 
of product sales to the U.S. government.  On a year-to-date basis, systems 
integration revenue decreased by $9.1 million over the prior year. 

As a result of continued softness in revenue from our domestic channels and 
other uncertainties discussed in this Management's Discussion and Analysis, 
management expects overall revenue levels for the fourth quarter and twelve 
months of fiscal year 1997 to be lower than the comparable periods of fiscal 
1996.

Gross Margin

Total gross margin as a percentage of total revenue decreased to 50.1% from 
51.6% in the third quarter and decreased to 49.9% from 50.2% in the first nine 
months of fiscal 1997 from the comparable periods of fiscal 1996.  The 
decrease for both periods was a result of a decrease in product gross margin 
partially offset by increased service and other gross margin.  Product gross 
margin decreased to 58.0% and 57.7% for the third quarter and first nine 
months of fiscal 1997 from 60.1% and 60.0%, respectively, for the comparable 
periods of fiscal 1996.  The quarter-over-quarter decrease resulted primarily 
from a charge to cost of goods sold to increase inventory reserves for certain 
end-of-life access products.  Product margins for the quarter and year-to-date 
periods also decreased as a result of a higher mix of lower gross margin 
products.  On a year-to-date basis, this decrease was largely attributable to 
increased sales in the Asia Pacific/Latin American region, which typically 
have lower margins as they are sold predominantly through distributors.

Service and other gross margin increased to 33.9% and 34.6% for the third 
quarter and first nine months of fiscal 1997 from 32.5% and 31.6%, 
respectively, in the comparable periods of the prior year.  The 
quarter-over-quarter fluctuation was a result of increased margins on lower 
margin systems integration services provided under a U.S. government contract.  
The year-over-year increase resulted from a lower mix of these integration 
services, as the revenue for these services has decreased 25.6% for the first 
nine months of fiscal 1997 from the comparable period of fiscal 1996.  The 
gross margin on these services increased to 23.1% from 17.9% 
quarter-over-quarter and increased to 19.0% from 14.9% year-over-year.  
Management expects service and other gross margin to continue to fluctuate as 
a result of the changes in mix between systems integration services and other 
service revenue.

Operating Expenses

Operating expenses in the third quarter and first nine months of fiscal 1997 
increased $2.1 million and $6.4 million from the comparable periods of fiscal 
1996, and increased as a percentage of total revenue to 39.6% from 36.5% 
quarter-over-quarter and 40.4% from 36.4% year-over-year as a result of higher 
expenses and lower revenues.  Management expects operating expenses to 
continue to increase during the remainder of fiscal 1997.

Sales and marketing expense increased $1.4 million and $2.6 million in the 
third quarter and first nine months of fiscal 1997, respectively, from the 
comparable periods of fiscal 1996.  As a percentage of total revenue, sales 
and marketing expense increased to 24.1% and 24.0% for the third quarter and 
first nine months of fiscal 1997 from 22.0% and 22.1%, respectively, for the 
comparable periods of fiscal 1996.  The increased spending is primarily the 
result of the addition of personnel to support expansion of the sales and 
marketing infrastructure, increased travel expenses and increased advertising 
and promotional expenses, offset partially by decreased sales commissions.  
Management expects sales and marketing expenses to increase during the 
remainder of fiscal 1997.

<Page 9>

Research and development expense increased $.6 million and $4.1 million in the 
third quarter and first nine months of fiscal 1997, respectively, from the 
comparable periods of fiscal 1996, and increased as a percentage of total 
revenue to 12.0% and 12.8%, respectively, from 11.2% and 10.7% in the 
comparable periods of fiscal 1996.  The increase in spending is primarily due 
to an increase in direct project funding, primarily salary-related expenses 
and purchases of direct materials and capital equipment to support product 
development.  Management plans to continue funding research and development 
efforts at levels necessary to advance product programs and therefore expects 
research and development spending to continue to increase during the remainder 
of fiscal 1997.

General and administrative expense increased $.1 million and decreased $.3 
million, respectively, in the third quarter and first nine months of fiscal 
1997 as compared to the prior year, and remained comparable as a percentage of 
total revenue.  Management expects general and administrative expense to 
remain fairly flat for the remainder of fiscal 1997.

Income from Operations

Income from operations for the third quarter and first nine months of fiscal 
1997 decreased to $8.7 million and $22.7 million from $12.8 million and $34.1 
million, respectively, for the comparable periods of fiscal 1996.  The Company 
expects income from operations for the remainder of fiscal 1997 to be below 
operating income for the comparable period of fiscal 1996.

Non-Operating Items

Interest income for the third quarter and first nine months of fiscal 1997 
remained fairly flat from the comparable periods of fiscal 1996.  Interest 
expense decreased by $1.0 million quarter-over-quarter and $2.4 million 
year-over-year as a result of the partial call of the Company's convertible 
subordinated debentures in the third quarter of fiscal 1996.

The third quarter and first nine months of fiscal 1997 included a provision 
for income tax expense of $2.8 million and $8.7 million, respectively, at 
effective rates of 30% and 35%, as compared to $4.4 million and $11.9 million 
at an effective rate of 35%, in the comparable periods of fiscal 1996.  In the 
third quarter of fiscal 1997, the Company decreased the year-to-date tax rate 
from 38% to 35% primarily as a result of expected U.S. tax benefits on 
increased export revenue.

The results for the first nine months of fiscal 1997 also included an 
extraordinary gain of $444 thousand, or two cents per share, arising from the 
repurchase of $4.7 million of convertible subordinated debentures.


BUSINESS ENVIRONMENT AND RISK FACTORS

As mentioned above, the Company's business is subject to various risk factors 
and aspects of the business environment that could lead actual future results 
to differ materially from management's current projections and expectations.  
Among these risks are those that are described below.  This section should be 
read in conjunction with the Company's fiscal 1996 Form 10-K and other filings 
with the Securities and Exchange Commission.  

Historically, the majority of the Company's revenue each quarter results from 
orders received and shipped in that quarter, with a substantial percentage of 
orders and shipments concentrated in the final weeks of the quarter.  In 
addition, because of the lead times necessary to manufacture certain of the 
Company's products, and the Company's reliance on outside suppliers for 
product components, receipt of an order in a given quarter does not 
necessarily mean the Company will be in a position to ship the ordered product 
prior to the end of that quarter.

<Page 10>

Expense levels are relatively fixed and are set, in part, based on 
expectations regarding future revenue and margin levels.  These expectations 
derive from making judgments on issues such as future technology trends, 
competitive products and services, pricing and customer requirements, a 
process that involves evaluation of information that is often unclear and in 
conflict.  All markets for the Company's products are very competitive and 
dynamic and many are susceptible to changing economic conditions, regulations 
and political conditions.  The Company has limited visibility into factors 
that could influence its revenue, product mix and other revenue sources and 
margins, particularly in international markets that are served primarily by 
non-exclusive resellers.  

The Company's products incorporate intellectual property and technology owned 
by the Company or licensed from third parties.  The Company's ability to 
maintain and enhance the value of its intellectual property and technology and 
third party licenses will affect future product and service offerings.  
Moreover, the Company believes that operating results will depend on 
successful development and introduction of new products and enhancements to 
existing products and service offerings.  There can be no assurance that the 
Company will succeed in such efforts or that customers will accept new, 
enhanced and existing products and services in quantities and at prices and 
margins that are consistent with the Company's expectations.  Competition is 
intense for qualified technical personnel in the Silicon Valley and for 
qualified sales and marketing personnel throughout the world.  The Company's 
success depends on its ability to attract and retain employees necessary to 
support planned product development and marketing and sales initiatives.

The Company's products include components, assemblies and subassemblies that 
are currently available from single sources and, in some cases, are in short 
supply.  Testing and manufacturing is performed at the Company's Redwood City, 
California, facility.  Availability limitations, price increases or business 
interruptions could adversely impact revenue, margins and earnings. 

The Company has distribution, product and technology relationships with a 
number of significant customers and entities that are considered by the 
Company to be strategic.  Most of the Company's competitors have similar 
relationships with their respective customers and other parties.  Changes in 
the Company's relationships or changes in similar relationships among 
competitors could have a material impact on competitive and other factors 
described above, including the Company's operating results.  Also, to the 
extent that litigation or other claims are in the future asserted against the 
Company based on securities, intellectual property, patent, product, 
regulatory or other factors, they could materially adversely affect the 
Company's business, operating results and finances.

A significant portion of the Company's revenue comes from contracts with the 
U.S. government, most of which do not include purchase commitments.  There can 
be no assurance that orders from the U.S. government, or from other customers, 
will continue at historical levels, or that the Company will be able to obtain 
orders from new customers.

Because of the factors described above, as well as others that may affect the 
Company's operating results, past financial results may not be an accurate 
indicator of future performance.


LIQUIDITY AND CAPITAL RESOURCES

As of December 29, 1996, the Company had cash, cash equivalents and temporary 
cash investments of $120.4 million, as compared to $112.2 million as of March 
31, 1996.  Cash provided by operations was $22.7 million during the first nine 
months of fiscal 1997, which was a $1.2 million decrease from the cash 
provided by operations from the comparable period of the prior year.  This 
decrease was principally due to decreases in accrued liabilities and accounts 
payable on a year-to-date basis in fiscal 1997 as compared to increases in 
those balances in the prior year, and lower net income, offset partially by a 
decrease in inventory and lower increases in accounts receivable.

Net cash used for investing activities of $37.3 million for the first nine 
months of fiscal 1997 primarily consisted of $26.1 million in net purchases of 
temporary cash investments and $8.9 million in purchases of property and 
equipment.

<Page 11>

Net cash used for financing activities of $3.0 million for the first nine 
months of fiscal 1997 resulted from $3.9 million used to repurchase the 
Company's convertible subordinated debentures and $2.7 million used to 
repurchase the Company's Common Stock, partially offset by the issuance of 
$3.6 million of Common Stock related to the employee stock benefit plans.

During the second quarter of fiscal 1997, the Board of Directors authorized 
the Company to repurchase up to 10% of the outstanding shares of its Common 
Stock and to repurchase its outstanding  7-1/4% convertible subordinated 
debentures.   These purchases may be made on the open market from time to time 
at the discretion of the Company's management and at price levels the Company 
deems appropriate.  The Company may discountinue its purchases at any time it 
determines additional purchases are not warranted.  As of December 29, 1996, 
the Company had repurchased 204,600 of its shares of Common Stock at a 
weighted average price of $13.27 and repurchased debentures with a face value 
of $4,705,000 at a weighted average cost of 82.2% of the face value.

As of December 29, 1996 the Company had available an unsecured $10.0 million 
line of credit.  Borrowings under this committed facility are available 
through May 1997 and would bear interest at the bank's base rate (which 
approximates prime).  At December 29, 1996, there were no outstanding 
borrowings under this facility.

The Company believes that current cash and cash equivalents, temporary cash 
investments and cash flows from operations will be sufficient to fund 
operations, purchases of capital equipment and research and development 
programs currently planned at least through the next twelve months.


<Page 12>


                                   PART II

                             OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

         (a)   Exhibits

               Exhibit 11:  Statement re: Computation of Primary and Fully 
               Diluted Earnings Per Share.

         (b)   Reports on Form 8-K

               No report on Form 8-K was filed by the Company during its 
               fiscal quarter ended December 29, 1996.


<Page 13>

                                 SIGNATURE


     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.


(REGISTRANT)                        NETWORK EQUIPMENT TECHNOLOGIES, INC.

BY (SIGNATURE)                      /s/ Craig M. Gentner

(NAME AND TITLE)                    Craig M. Gentner
                                    Senior Vice President and 
                                    Chief Financial Officer and Secretary
                                    (Principal Financial and Accounting 
                                    Officer)

(DATE)                              February 10, 1997

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