SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. - 20549
_________________________
FORM 10-Q
(Mark One)
* QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
EXCHANGE ACT OF  1934 
For the Quarterly Period Ended October 2, 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 No. 0-12588
___________________________

SALIENT 3 COMMUNICATIONS, INC.
 (Exact name of registrant as specified in its charter)

 Delaware                 23-2280922 
(State of Incorporation) (IRS Employer Identification No.)

 P.O. Box 1498, Reading, Pennsylvania             19603 
(Mailing address of principal executive offices) (Zip Code)

(610) 856-5500
________________________________________________________________________________
(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  

                                            Class A       Class B 
                                            -------       -------
Number of shares of each class of
common stock outstanding as of
October 2, 1998 (including 111,250
shares of restricted stock and 
excluding 2,861,321 Class A
treasury shares):                         5,668,834       455,145



<PAGE>
SALIENT 3 COMMUNICATIONS, INC. AND SUBSIDIARIES
INDEX

Part I.  Financial Information                                     

Item I.

 Consolidated Condensed Balance Sheets at
  October 2, 1998 and January 2, 1998 (unaudited)                    

 Consolidated Condensed Statements of Operations for the
  three and nine month periods ended October 2, 1998
  and October 3, 1997 (unaudited)                                    

 Consolidated Condensed Statements of Cash Flows
  for the nine month periods ended October 2, 1998
  and October 3, 1997 (unaudited)                                    

 Notes to Consolidated Condensed Financial Statements                

Item II.

 Management's Discussion and Analysis of Results of
  Operations and Financial Condition                                 

Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K                            

Signatures                                                           
<PAGE>
<TABLE>
Part I. Financial Information                                              
                                                                         
 Salient 3 Communications, Inc. and Subsidiaries
 Consolidated Condensed Balance Sheets                                    
 October 2, 1998 and January 2, 1998                                
 (Unaudited)                                                             
 (000's)                                                                  
                                              October 2,        January 2,
                                                 1998              1998     
                                              ----------        ----------
 ASSETS                                                                    
                                                                          
 Current assets:                                                           
 <S>                                           <C>               <C> 
 Cash and cash equivalents                     $     951         $   2,979  
 Accounts receivable, net of allowance                                  
    for doubtful accounts of $1,655 and                                 
    $1,680, respectively                          23,049            23,798     
 Inventories                                      15,866            20,128    
 Deferred income taxes                             6,000             3,805     
 Other current assets                              6,473             4,013  
 Net assets held for sale                             -             16,195    
                                                 -------           -------
 Total current assets                             52,339            70,918    
                                                 -------           -------
                                                                           
 Property, plant and equipment, at cost           47,793            44,121    
 Less accumulated depreciation and                                          
   amortization                                   23,723            20,334    
                                                 -------           -------
                                                  24,070            23,787   
                                                 -------           -------
 Deferred income taxes                             8,840             7,010    
 Other assets                                      3,250             1,000    
 Goodwill                                         28,859            44,782  
                                                 -------           -------
 Total Assets                                  $ 117,358         $ 147,497   
                                                 =======           =======
<PAGE>                                                                      
 LIABILITIES & STOCKHOLDERS' EQUITY                                          
                                                                             
 Current liabilities:                                                       
 Notes payable                                 $   2,344         $   8,557   
 Accounts payable                                  6,750             7,587 
 Salaries and wages                                1,285             1,437  
 Income taxes, currently payable                   1,055             3,384  
 Estimated liability for contract losses           1,456             1,470    
 Other accrued liabilities                        10,652             8,332
                                                 -------           -------
 Total current liabilities                        23,542            30,767 
                                                 -------           -------

 Long-term debt                                   10,953            11,245
 Other long-term liabilities                       4,395             4,948  
 Self-insured retention                            2,677             2,677
                                                                               
Stockholders' equity:                                                       
 Common stock                                      8,985             8,985   
 Capital in excess of par value                   37,743            37,835
 Warrants outstanding                              1,665             1,665  
 Retained earnings                                70,501            89,929  
 Foreign currency translation adjustment             204                52 
 Deferred compensation-restricted stock           (1,219)           (1,368)  
 Treasury stock                                  (42,088)          (39,238) 
                                                 -------           -------
                                                  75,791            97,860 
                                                 -------           -------
 Total Liabilities and Stockholders' Equity    $ 117,358         $ 147,497  
                                                 =======           =======
                                                                           
 The accompanying notes are an integral part of the consolidated condensed 
 financial statements.                                                      
</TABLE>
<PAGE>                                                                   
<TABLE>

 Salient 3 Communications, Inc. and Subsidiaries
 Consolidated Condensed Statements of Operations
 (Unaudited)
 (000's except for share information)

                                      Nine Months Ended              Three Months Ended
                                  --------------------------    --------------------------
                                  Oct. 2, 1998  Oct. 3, 1997    Oct. 2, 1998  Oct. 3, 1997
                                  ------------  ------------    ------------  ------------
 <S>                                 <C>          <C>              <C>           <C>
 Telecommunications sales            $86,227      $77,296          $28,480       $27,919
 Cost of goods sold                   55,152       48,402           16,195        17,395
                                      ------       ------           ------        ------
 Gross profit                         31,075       28,894           12,285        10,524
                                      ------       ------           ------        ------
 Selling, general and
  administration                      29,015       25,372            8,952         9,260
 Purchased in-process
  research and development               -          6,150              -             -
 Goodwill impairment and
  restructuring charge                18,190          -                -             -
 Research and development              6,642        6,841            2,192         2,384
 Goodwill amortization                 1,144        1,266              339           457
                                      ------       ------           ------        ------
 Operating profit (loss)             (23,916)     (10,735)             802        (1,577)
                                      ------       ------           ------        ------
 Interest income                         169           73               95            40
 Interest expense                      1,069        1,526              240           403
                                      ------       ------           ------        ------
 Pre-tax income (loss)
  from continuing operations         (24,816)     (12,188)             657        (1,940)
                                      ------       ------           ------        ------
 Provision (benefit) for taxes
  on income (loss)                    (4,880)      (2,218)             251          (699)
                                      ------       ------           ------        ------
 Net income (loss)
  from continuing operations         (19,936)      (9,970)             406        (1,241)
                                      ------       ------           ------        ------
 Income (loss) from discontinued
  operations:

  Technical Services Segment
  (less applicable provision
  (benefit) for taxes of
  $643 and $698 for the nine month
  periods ended and $(90) and $200
  for the three month periods
  ended, respectively)                 1,050        1,214             (147)          354

  Real Estate Segment
  (less applicable income taxes of
  $0 and $450 for the nine month
  periods ended and $0 and $69
  for the three month periods
  ended, respectively)                   -            781               -            122

  Gain on disposals of subsidiaries
  (less applicable income taxes
  of $0 and $5,945 for the nine
  month periods ended
  and $0 and $5,362 for the
  three month periods ended,
  respectively)                          100        8,080              100         7,000
                                      ------       ------           ------        ------
 Net income (loss) from
  discontinued operations              1,150       10,075              (47)        7,476
                                      ------       ------           ------        ------

 Total net income (loss)            $(18,786)     $   105          $   359       $ 6,235
                                      ======       ======           ======        ======
 Per share of common stock (Basic and diluted):

  Net income (loss)
  from continuing operations        $  (3.21)     $ (1.58)         $  0.07       $ (0.20)

  Net income (loss) from
  discontinued operations:

  Technical Services Segment        $   0.17      $  0.20          $ (0.03)      $  0.05

  Real Estate Segment               $    -        $  0.12          $   -         $  0.03

  Disposal of subsidiaries          $   0.02      $  1.28          $  0.02       $  1.11

Total earnings (loss) per share     $  (3.02)     $  0.02          $  0.06       $  0.99

Cash dividend per share             $   0.10      $  0.30          $   -         $  0.10

Basic weighted average shares
     outstanding                   6,217,698    6,305,755        6,087,845     6,292,933

 The accompanying notes are an integral part of the consolidated condensed
  financial statements.
</TABLE>
<PAGE>
<TABLE>
 Salient 3 Communications, Inc. and Subsidiaries
 Consolidated Condensed Statements of Cash Flows
 (Unaudited)
 (000's)
                                                          Nine Months Ended
                                                      --------------------------
                                                       October 2,     October 3,
                                                          1998           1997   
                                                       ----------     ----------
 Cash flows from operating activities:
                                                        
 <S>                                                  <C>           <C>   
 Net income (loss)                                    $(18,786)     $     105  
 Adjustments to reconcile net loss to net
  cash provided by (used for) operating activities:
     Gain on sale of subsidiary                           (100)       (14,025) 
     Depreciation and amortization                       4,921          5,547 
     Purchased in-process research and
       and development write-off                           -            6,150 
     Goodwill write-off                                 15,789            - 
     Reserve provisions                                    317            277 
     Benefit from deferred income taxes                 (4,440)        (1,650) 
     Restrictive stock expense                             107            (26) 
     Changes in current assets and current liabilities
     net of effects from acquisitions and dispositions:
      Accounts receivable and unbilled revenue            (481)         3,989 
      Inventories                                        4,416         (2,456) 
      Other current assets                                (292)        (1,068) 
      Accounts payable and salaries and wages           (1,487)        (2,690) 
      Other accrued liabilities                          1,700         (3,987) 
      Income taxes, currently payable                   (2,184)         5,023 
                                                        ------         ------
      Net cash used for operating activities              (520)        (4,811) 
                                                        ------         ------
                                                       
 Cash flows from investing activities:
                                                        
 Payments for acquisitions                              (1,274)       (19,302) 
 Payments for property, plant and equipment             (4,010)        (5,577) 
 Proceeds from sale of subsidiary                       14,232         45,013 
                                                        ------         ------
      Net cash used for investing activities             8,948         20,134 
                                                        ------         ------
                                                        
 Cash flows from financing activities:
                                                        
 Proceeds from issuance of debt                            -           19,900 
 Payment of debt                                          (299)       (35,231) 
 Borrowings (repayments) under note payable             (6,213)         2,458 
 Issuance of treasury stock in connection
   with stock option, award and purchase
   plans                                                   205            102 
 Payments to acquire treasury stock                     (3,104)          (441) 
 Cash dividends paid                                      (644)        (1,915) 
 Other, net                                               (401)           530 
                                                        ------         ------ 
  Net cash used for financing activities               (10,456)       (14,597) 
                                                        ------         ------

 Net increase (decrease) in cash and cash equivalents   (2,028)           726 
                                                        
 Cash and cash equivalents at beginning of period        2,979          1,482 
                                                        ------         ------
 Cash and cash equivalents at end of period            $   951        $ 2,208 
                                                       =======         ======
 Supplemental cash flow disclosures:
                                                        
 Interest paid                                         $ 1,084        $ 2,145 
                                                        ======         ======
 Income taxes paid, net of refunds received            $ 1,992        $ 1,603 
                                                        ======         ======
                                                        
 The accompanying notes are an integral part of the consolidated condensed
 financial statements.                                  
</TABLE>
                                                        
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(000's except for share and per share information) 

1. In the first quarter of 1997, the Company accounted for both 
its Technical Services and Real Estate Segments as 
discontinued operations.

The results for technical services and the real estate 
segment have been classified as discontinued operations for 
all periods presented in the Consolidated Condensed 
Statements of Operations and Balance Sheets.  The assets and 
liabilities of the discontinued operations have been 
classified in the Consolidated Condensed Balance Sheets as 
"Net assets held for sale."   Discontinued operations have 
not been segregated in the Consolidated Condensed Statements 
of Cash Flows and, therefore, amounts for certain captions 
will not agree with the respective Consolidated Condensed 
Statements of Operations.

The following is a summary of revenue by discontinued segment:
                          Three Months Ended          Nine Months Ended
                     Oct. 2, 1998   Oct. 3, 1997   Oct. 2, 1998   Oct. 3, 1997
                     ------------   ------------   ------------   ------------
 Revenues:
  Technical Services    $ 5,591        $15,191        $48,251        $51,284
  Real Estate               -              696            -            5,026
                         ------         ------         ------         ------
                        $ 5,591        $15,887        $48,251        $56,310
                         ======         ======         ======         ======

2. During the first quarter of 1998, the Company adopted 
Statement of Financial Accounting Standards No. 130,
which specifies reporting requirements for 
comprehensive income.  The Company has evaluated the impact 
of SFAS 130 and has determined that it is not material.  The 
Company will also adopt the Statement of Financial Accounting 
Standards No. 131, "Disclosures about Segments of an 
Enterprise and Related Information", at the end of 
1998 and expects to report three reportable business segments 
- wireless, access products and industrial.

3. The financial statements furnished herein reflect all 
adjustments which are, in the opinion of management, 
necessary for a fair presentation of financial position and 
results of operations for the interim periods.  Such 
adjustments are of a normal recurring nature.  The 
accompanying financial statements are presented in accordance 
with the requirements of Form 10-Q and consequently do not 
include all of the disclosures normally required by generally 
accepted accounting principles or those normally made in the 
Company's annual Form 10-K filing.  Accordingly, the reader 
of this Form 10-Q may wish to refer to the Company's Form 10-
K for the year ended January 2, 1998 for further information.

4. Net income per share of common stock was determined using the 
average number of Class A and Class B shares outstanding excluding
111,250 shares of restricted stock.  No preferred stock was
outstanding as of October 2, 1998.

During the fourth quarter of 1997, the Company adopted 
Statement of Financial Accounting Standards No. 128 (SFAS 
128), which requires companies to report both basic and 
dilutive earnings per share.  Dilutive shares outstanding 
were determined on the assumption that all outstanding 
options, warrants and shares of restricted stock with a 
strike price below the respective period-end stock price, 
would be issued.  Dilutive shares outstanding for the third 
quarter of 1998 and 1997 were 6,089,997 and 6,332,588, 
respectively. Dilutive shares outstanding for the nine month 
period ending October 2, 1998 and October 3, 1997 were 
6,223,542 and 6,356,775, respectively.  These additional 
shares had no impact to the Company's earnings per share 
calculation.

5. In the second quarter of 1998, the Company recorded $23,089 
in charges for restructuring and asset impairment 
($18,190), inventory write-downs ($4,353), and other 
miscellaneous expenses ($546).  The $23,089 charge after an 
income tax benefit of $4,225 was $18,864 or $3.02 per share 
for the second quarter.  The restructuring and asset 
impairment charges of $18,190 include: (a) $2,401 relating to 
severance and other costs for approximately 140 manufacturing 
employees due to outsourcing the manufacturing process at XEL 
Communications, Inc. (XEL), as well as the consolidation of 
manufacturing of the Instrument Associates Division of GAI-
Tronics into the Company's Reading, Pennsylvania headquarters 
and (b) an asset impairment charge of $15,789 relating to the 
write-down of the carrying value of goodwill related to XEL 
($10,987 with no tax benefit) and the Instrument Associates 
Division of GAI-Tronics (pretax charge of $4,802).  The 
Company also re-evaluated its product offerings and decided 
to discontinue certain low margin product lines.  As a 
result, other expenses of the transition include inventory 
write-downs at the Company's SAFCO and XEL subsidiaries and 
Instrument Associates Division of $4,353, which are included 
in cost of goods sold, and miscellaneous expenses of $546, 
which are included in selling, general and administration.

The following table displays a rollforward of the liabilities 
for the restructuring charge from April 3, 1998 to October 2, 
1998:
                          April 3,                                   Oct. 2,
                            1998                    Amounts            1998
  Type of Cost            Balance     Additions     Utilized         Balance
  --------------------------------------------------------------------------
  Employee separations    $  -         $1,075        ($441)          $  634
  Facility closings          -          1,185           -             1,185
  Other                      -            141           -               141
  --------------------------------------------------------------------------
  Total                   $  -         $2,401        ($441)          $1,960
                          ======       ======        ======          ======

6. The components of inventories as of the balance sheet dates 
were as follows:
                                 Oct. 2, 1998    Jan. 2, 1998
                                 ------------    ------------
Raw material and components         $ 8,930        $12,465
Work in process                       2,408          2,500
Finished goods                        4,528          5,163
                                     ------         ------
                                    $15,866        $20,128
                                     ======         ======

7. Other accrued liabilities included an accrual for workers' 
compensation of $1,525 and $1,913 at October 2, 1998 and 
January 2, 1998, respectively.  Also included in other 
accrued liabilities at October 2, 1998 was an accrual for 
$1,100 that relates to employee separations, facility 
closings and other costs, as discussed in Note 5.

8. Effective January 3, 1998, the Company acquired all of the 
outstanding stock of Elemec Systems, Ltd. (Elemec) for $952, 
including acquisition costs.  Elemec is part of the Company's 
industrial telecommunications business and was merged into 
GAI-Tronics Corporation's European operations.   

On April 21, 1997, the Company acquired all of the 
outstanding capital stock of TEC CELLULAR, Inc. (TEC) for 
$14,139, including acquisition costs, plus seven year 
warrants exercisable to purchase 100,000 shares of the 
Company stock at $18 per share.  In conjunction with the 
acquisition, the Company recorded a $6,150 after-tax charge 
for purchased in-process research and development.  TEC is 
part of the Company's wireless telecommunication business and 
is a division of SAFCO Technologies, Inc.

On April 30, 1997, the Company acquired all of the 
outstanding stock of DAC Ltd. (DAC) for $5,351, including 
acquisition costs.  DAC is part of the Company's industrial 
telecommunication business and was merged into GAI-Tronics 
Corporation's European operations.

9. On July 24, 1998, the Company completed the last of its 
planned divestitures with the sale of its Resource 
Consultants, Inc. (RCI) subsidiary to the management of RCI 
and an investor group for $18,000, substantially all in cash
and subject to final closing adjustments.  The sale price 
also included a $2,750 note that was recorded in other assets.    
The sale resulted in a gain of $100.  Proceeds of the sale 
were used to pay down outstanding bank debt.

On July 31, 1997, the Company sold its real estate complex, 
Green Hills Corporate Center, to Brandywine Reality Trust for 
$40,000, substantially all in cash.  The sale resulted in a 
$7,000 gain, net of $5,362 of income taxes, or $1.11 per 
share.  Proceeds were used to reduce the Company's 
outstanding debt.

On June 24, 1997, the Company sold its SRA Technologies, Inc. 
subsidiary to Dames & Moore, Inc. for $8,800 in cash.  The 
sale of SRA resulted in a $1,080 gain, net of income taxes of 
$583, or $0.17 per share.  Proceeds were used to reduce the 
Company's outstanding debt.

10. Under the terms of the loan agreement, effective August 1998, 
the Company has a working capital line of $12,000 and an 
acquisition line of $12,000.  The agreement contains a number 
of financial and other covenants that, among other things, 
requires maintenance of a certain ratio of funded debt to 
earnings before interest, taxes, depreciation and 
amortization.  The agreement also contains a provision that 
limits the working capital line to a defined borrowing base
consisting of eligible receivables and inventory amounts.   

Lines of credit are available through June 30, 1999 to fund both
short-term cash needs as well as future acquisitions.  As of
October 2, 1998, the Company had an available working line of
credit of $10,489, reduced by outstanding borrowings of $2,344,
and issued letters of credit aggregating $2,000.  The Company
was in compliance with its debt covenants at October 2, 1998.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND 
FINANCIAL CONDITION.
(000's except for share and per share information)

Results of Operations

For the quarter, the Company had income of $406 or $.07 per share 
from continuing operations for 1998 compared to a loss of $1,241 
or $.20 per share for 1997. The improvement was due to higher 
sales and improved gross margin at the wireless group, and cost 
reductions and improved gross margin by the access product group, 
offset in part by lower sales by the industrial group.

For the nine months ended October 2, 1998, the Company lost 
$19,936 or $3.21 per share from continuing operations.  Included 
in the results were expenses of $23,089 resulting from charges for  
restructuring and asset impairment ($18,190), inventory write-
downs ($4,353), and other miscellaneous expenses ($546).  The 
$23,089 charge after an income tax benefit of $4,225 was $18,864 
or $3.02 per share during the second quarter.  

The restructuring and asset impairment charges of $18,190 included 
$2,401 relating to severance and other costs of outsourcing the 
manufacturing process at XEL Communications, Inc. (XEL), as well 
as the consolidation of manufacturing of the Instrument Associates 
Division of GAI-Tronics Corporation into the Company's Reading, 
Pennsylvania headquarters.  These charges also included an asset 
impairment charge of $15,789 relating to the write-down of the 
carrying value of goodwill related to XEL  ($10,987 with no tax 
benefit) and the Instrument Associates Division of GAI-Tronics 
(pretax charge of $4,802).

The Company also re-evaluated its product offerings and decided to 
discontinue certain low margin product lines.  As a result, other 
expenses of the Company's business transition included inventory 
write-downs at the Company's SAFCO Technologies, Inc. and XEL 
subsidiaries and Instrument Associates Division of $4,353, which 
were included in costs of goods sold, and miscellaneous expenses of 
$546, which were included in selling, general and administration.

For the nine months ended October 3, 1997, the Company lost $9,970 
or $1.58 per share from continuing operations.  Included in the 
results, was a $6,150 or $.97 per share charge for purchased in-
process research and development associated with the TEC Cellular 
Inc. (TEC) acquisition (Note 8).  The purchased in-process 
research and development had not yet reached technological 
feasibility and had no alternative future use as of the date of 
acquisition.

Excluding the one time charges in 1998 and write-off of purchased 
in-process research and development in 1997, the Company lost 
$1,072 or $.17 per share from continuing operations for the first 
nine months of 1998 compared to a loss of $3,820 or $.61 per share 
for the same period in 1997.  The improvement was due to higher 
sales and improved gross margin for the wireless group, cost 
reductions and improved gross margin by the access product group, 
higher sales by the industrial group and reduced corporate 
interest expense.

Sales increased 12% and 2% for the nine and three month periods in 
1998, respectively, compared to the same periods in 1997.  The 
increase in sales in the nine month period was primarily due to 
strong sales from the wireless segment, the acquisitions in the 
second quarter of 1997, and the Elemec acquisition in the first 
quarter of 1998 (Note 8).  The increase in sales for the quarter 
was primarily due to strong sales from the wireless group, offset 
in part by lower sales by the access products and industrial 
groups.

The following is a breakdown of sales by telecommunications group:
      
                       Year to Date       Third Quarter
                       1998     1997      1998     1997
                       ----     ----      ----     ---- 
Industrial          $49,110  $44,318   $15,030  $16,202
Access product       18,690   20,723     5,178    5,921
Wireless             18,427   12,255     8,272    5,796
                     ------   ------    ------   ------
  Total             $86,227  $77,296   $28,480  $27,919
                     ======   ======    ======   ======

The sales by telecommunications group have been restated in 
connection with the Company's adoption of the Statement of 
Financial Accounting Standards No. 131, "Disclosures about 
Segments of an Enterprise and Related Information" (SFAS 131).  
The Company will adopt SFAS 131 at the end of 1998 and expects to 
report three reportable business segments - wireless, access 
products and industrial. 

The higher industrial sales in the nine month period ended October 
2,  1998 were due primarily to the DAC and Elemec acquisitions.  
The decline in sales for the three month period was due to a 
decrease in sales at the Reading location of GAI-Tronics.

For the nine and three month periods ended October 2, 1998, the 
access product sales declined by 13% and 10% compared to the 
comparable periods in 1997, due to a reduction in customer demand 
for analog channel units, offset in part by new partnership 
revenue. The decision at the end of the first quarter of 1997 to 
exit the contract manufacturing business was a contributing factor 
to the sales decline for the nine month period. 

For the quarter, the wireless group's sales increased 43% due to 
the strength in sales of its test and measurement products.  Year 
to date, the wireless group's sales increased 50%, due to sales 
of its test and measurement products and the TEC acquisition in 
the second quarter of 1997.

Excluding the one time charges, the consolidated gross profit 
percentage was 41% and 43% for the nine and three month periods in 
1998, respectively, compared to 37% and 38% for the same periods 
in 1997. The wireless group has a higher gross profit percentage 
than the industrial and access product  groups.  Therefore, as a 
result of a higher percentage of sales by the wireless group, the 
Company's gross profit percentage increased for the nine months 
ended October 2, 1998.  For the quarter, higher sales from the 
wireless group, coupled with significant cost reductions from the 
access product group resulted in improved gross margins.

Selling, General and Administration

Selling, general and administration increased 14% for the nine 
month period ended October 2, 1998, and decreased 3% in the third 
quarter of 1998 compared to the same period in 1997.  The 
increase in selling, general and administration for the nine month 
period resulted primarily from acquisitions and $546 relating to 
the one time charge recorded in the second quarter of 1998.  The 
decrease in selling, general and administration for the third 
quarter resulted from reduced costs at the holding company and cost 
reductions by the access product group.

As a percentage of sales, selling, general and administration was 
34% and 31% for the first nine months and the third quarter of 
1998 compared to 33% in the same periods in 1997.  The unfavorable 
relationship for the nine months ended October 2, 1998, resulted 
primarily from the one time charge of $546, and the increase in 
the percentage of business coming from the wireless group.  The 
wireless group has a higher percentage of selling, general and 
administration to sales compared to the industrial and access 
product groups.  The favorable relationship in the third quarter 
stemmed primarily from reduced costs at the holding company, cost 
reductions in the access product group and increased revenues by 
the wireless groups.

Research and Development, Goodwill Amortization and Interest 
Expense

Year to date, research and development decreased 3% due to  
reductions at the access product group, partially offset by the 
2nd quarter 1997 acquisitions and the Elemec acquisition.  For the 
quarter, research and development decreased 8% primarily due to 
reductions at the access product group.

Year to date, goodwill amortization decreased 10% due to the 
write-off of all of XEL's and a portion of Instrument Associates' 
goodwill, offset partially by the second quarter 1997 acquisitions 
and the Elemec acquisition.  For the quarter, goodwill 
amortization decreased 26% due to the asset impairment and related 
write-off of XEL's and Instrument Associates' goodwill, offset in 
part by the Elemec acquisition.

Interest expense declined 30% and 40% for the first nine months 
and third quarter of 1998 compared to the same periods of 1997, 
due to the proceeds from the sales of discontinued operations, 
offset in part by payments for the acquisitions.

Provision for taxes on income

Excluding the aforementioned charges, the effective tax rate was 
38% for the first nine months and the third quarter of 1998 
compared to 37% and 36%, respectively, in the same periods of 
1997.  The higher tax rate was due to lower than expected research
and development credits in 1998.

Income from discontinued operations

In June 1996, the Company announced that its Board of Directors 
had authorized management to explore strategic options for its 
remaining subsidiaries within the technical services and real 
estate segments.  The decision was reached because of the 
Company's desire to focus its business only on telecommunications.

In accord with this decision, during the first quarter of 1997, 
the Company accounted for its technical services and real estate 
segments as discontinued operations.

On July 24, 1998, the Company completed the last of its planned 
divestitures with the sale of its Resource Consultants, Inc. (RCI) 
subsidiary to the management of RCI and an investor group for 
$18,000, substantially all in cash.  The Company reported a gain 
of $100 on the transaction.  Proceeds of the sale were used to pay 
down outstanding debt.

On July 31, 1997, the Company sold its real estate complex, Green 
Hills Corporate Center (GHCC), to Brandywine Realty Trust, for 
$40,000, substantially all in cash.  The sale resulted in a $7,000 
gain, net of income taxes of $5,362, or $1.11 per share.  On June 
24, 1997, the Company sold its SRA Technologies, Inc. (SRA) 
subsidiary to Dames & Moore, Inc. for $8,800 in cash.  The sale of 
SRA resulted in a $1,080 gain, net of income taxes of $583, or 
$0.17 per share.  The Company reduced its debt levels with the 
sales proceeds.

Liquidity and Capital Resources

Working capital decreased $11,354 in 1998.  The decline in working 
capital was due to the creation of short term reserves associated 
with the one time charges, stock repurchases, and the purchase of 
Elemec.  Amounts generated from operations, available cash and 
cash equivalents and an existing line of credit should provide 
adequate working capital.  In addition, the Company previously 
announced elimination of the $0.10 per share quarterly dividend 
after the March 10, 1998 payment.  Elimination of the dividend 
provides additional funds to satisfy working capital requirements.  
The Company does not expect to make any contingent payments to 
former XEL and SAFCO Corporation shareholders during 1998.

Under the terms of the loan agreement, the Company has a maximum 
working capital line of $12,000 and an acquisition line of $12,000 
with First Union National Bank.  The agreement contains a number 
of financial and other covenants that, among other things, 
requires a certain ratio of funded debt to earnings before 
interest, taxes, depreciation and amortization.  The agreement 
also contains a provision that limits the working capital line to 
a defined borrowing base consisting of eligible receivables and 
inventory amounts.

Lines of credit are available through June 30, 1999 to fund both 
short-term cash needs as well as future acquisitions.  As of 
October 2, 1998, the Company had an available working capital line 
of credit of $10,489, reduced by outstanding borrowings of $2,344, 
and issued letters of credit aggregating $2,000.  The Company was 
in compliance with its debt covenants at October 2, 1998.  

The Company estimates that its total capital expenditures in 1998, 
excluding acquisitions, will be approximately $5,500.  No 
restrictions on cash transfers between the Company and its 
subsidiaries exist.

Other

In the second quarter of 1997, the FASB issued Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive 
Income" (SFAS 130).  The Company assessed SFAS 130 during the 
first quarter of 1998, and determined that SFAS 130 would have no 
material effect on the Company.

The currency problems with certain Asian countries have had a 
negative impact to their economies.  The Company currently sells 
to customers located in some of these countries and expects that 
there could be some impact from the currency problems on the
volume or timing of the products sold in those countries. 

The Company recognizes the issues associated with the year 2000
problem and need to ensure that its operations will not be adversely 
impacted by year 2000 software failures.  Comprehensive reviews of
all systems and applications, including key suppliers and vendors,
are being conducted, implementation plans to resolve any issues are
being formulated and certain corrective actions have been 
commenced.  The Company expects its year 2000 compliance programs
to be completed by the end of 1999.  The total cost of achieving
year 2000 compliance is not deemed to be material.  All modification
costs are expensed as incurred.

This Form 10-Q contains certain statements of a forward-looking 
nature relating to future events or the future financial 
performance of the Company.  Such statements are only predictions 
and involve risks and uncertainties, and actual events or 
performance may differ materially as expressed in any such forward 
looking statements.  Potential risks and uncertainties include, 
without limitation: projections regarding 1998 subsequent 
revenues, capital requirements, transaction gains, product 
diversity, decreased investment, operating profitability, expected 
orders from contracts, market position, expected new technology 
partnerships, the effect of general economic conditions in the 
United States, Asia and Latin America, the impact of competitive 
products, services and pricing, and demand and market acceptance 
risks of current and new products and services; and with respect 
to the Telecommunications business, technology change, and risks 
of product development and commercialization difficulties.  
Further information on factors that could affect the Company's 
future financial performance can be found in the Company's other 
filings with the Securities and Exchange Commission.  Words  
such as "estimates", "positioned", "yields", "should generate", 
"appears", "viewed", "could potentially", "would position", 
"expected", "does not expect" and "should allow" indicate the 
presence of forward looking statements.
<PAGE>
Part II.  Other Information  

Item 5.  Exhibits and Reports on Form 8-K
 (a) Exhibits
  None.

 (b) Reports on Form 8-K
  (1) The registrant filed Form 8-K on July 24, 1998 for 
      the sale of Resource Consultants, including Pro 
      Forma Unaudited Consolidated Condensed Financial 
      Statements.

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.
      Salient 3 Communications, Inc.

     /s/Paul H. Snyder 
     Paul H. Snyder
     Senior Vice President and 
     Chief Financial Officer

Date:  November 13, 1998