UNITED STATES
                   SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549

                               FORM 10-K

           Annual Report Pursuant to Section 13 or 15(d) of
              the Securities and Exchange Act of 1934

[X]     Annual report pursuant to section 13 or 15(d) of the Securities 
        Exchange Act of 1934 for the fiscal year ended December 28, 1996 or
[ ]     Transition report pursuant to section 13 or 15(d) of the Securities 
        Exchange Act of 1934 for the transition period from ______________ to 
        ______________.

Commission file number:     0-15627

                     SEQUENT COMPUTER SYSTEMS, INC.
        (Exact name of registrant as specified in its charter)

                Oregon                              93-0826369
(State or other jurisdiction of       (I.R.S. Employer Identification Number)
 incorporation or organization)     


        15450 S.W. Koll Parkway, Beaverton, Oregon  97006-6063
     (Address of principal executive offices, including zip code)

  Registrant's telephone number, including are code:   (503) 626-5700

  Securities registered pursuant to Section 12(b) of the Act:   None

     Title of each class     Name of each exchange on which registered
   ______________________            ______________________

       Securities registered pursuant to Section 12(g) of the Act:
                   Common Stock, $.01 par value
                       (Title of Class)

     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_____

     Indicate by check mark if disclosure of delinquent filers pursuant to 
Item 405 of Regulation S-K is not contained herein, and will not be contained, 
to the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.

     Aggregate market value of Common Stock held by nonaffiliates of the 
Registrant at February 28, 1997, based on the closing price on such date on 
the NASDAQ National Market System:  $592,694,320.

     Number of shares of Common Stock outstanding as of February 28, 1997:  
34,765,481.

                       Documents Incorporated by Reference
                                                Part of Form 10-K into
              Document                            which incorporated
   1996 Annual Report to Shareholders              Parts II and IV
     Proxy Statement for 1997 Annual     
        Meeting of Shareholders                       Part III

                          TABLE OF CONTENTS

Item of Form 10-K                                                  Page

PART I

   Item 1.    Business                                               3

   Item 2.    Properties                                            11

   Item 3.    Legal Proceedings                                     11

   Item 4.    Submission of Matters to a Vote of Security Holders   11

   Item 4(a). Executive Officers of the Registrant                  11

PART II

   Item 5.    Market for the Registrant's Common Equity and         13
              Related Stockholder Matters

   Item 6.    Selected Financial Data                               13

   Item 7.    Management's Discussion and Analysis of Financial     13
              Condition and Results of Operations

   Item 8.    Financial Statements and Supplementary Data           13

   Item 9.    Changes in and Disagreements with Accountants         13
              on Accounting and Financial Disclosure

PART III

   Item 10    Directors and Executive Officers of the Registrant    14

   Item 11    Executive Compensation                                14

   Item 12    Security Ownership of Certain Beneficial Owners and   14     
              Management     

   Item 13    Certain Relationships and Related Transactions        14

PART IV

   Item 14.   Exhibits, Financial Statement Schedules and Reports   15
              on Form 8-K

SIGNATURES                                                          23

                                PART I


Item 1.     Business.

     Sequent Computer Systems, Inc. ("Sequent" or "the Company") is a provider 
of scalable data center ready open systems solutions for large organizations 
spanning diverse industries.  Sequent designs, manufactures and markets high-
performance symmetric multiprocessing (SMP) and CC-NUMA (Cache Coherent Non-
Uniform Memory Access) computer systems and operating environment software.  
The Company's systems are widely used for large-scale on-line transaction 
processing (OLTP), applications in decision support systems (DSS) and data 
warehouses, for custom applications built upon relational database management 
systems (RDBMS), and as the central server in client-server architectures.  
Sequent's project-oriented offerings include a comprehensive portfolio of 
customer, professional and education services to solve complex Information 
Technology (IT) problems.  The Company has an established set of partnerships 
with other software, hardware and services providers to deliver complete 
solutions to its customers.

     The Company was incorporated in Delaware in January 1983 and was 
reincorporated in Oregon in December 1988.  Unless the context otherwise 
requires, references in this Report on Form 10-K to the "Company" or "Sequent" 
refer to the prior Delaware corporation, the current Oregon corporation and 
its subsidiaries.  The Company's principal executive offices are located at 
15450 S.W. Koll Parkway, Beaverton, Oregon 97006, and its telephone number at 
that location is (503) 626-5700.

Market Overview 

     In the past decade, Sequent has developed the experience to guide large 
organizations through complex changes faced in moving to open systems.  These 
changes include the renovation of business processes aligned with new 
information systems, maximizing benefits of SMP architectures and open 
systems, widespread use of relational database management system (RDBMS) 
applications and the substitution of OLTP for traditional batch processing.  
Since the launch of its SMP family of systems in 1984, Sequent has installed 
more than 8,000 SMP open systems worldwide.

     Information Systems Renovation.  Global economies and intense competitive 
pressures today prompt many companies to provide employees with access to data 
in order to increase responsiveness to customer needs.  This need for access 
to data requires companies to re-engineer or redesign their business processes 
to take advantage of innovative open client/server architectures, systems and 
products.  Sequent offers a focused collection of IT infrastructure 
consulting, education and implementation services.  These services are geared 
to assess an organization's current systems, work with the customer's IT staff 
or their chosen systems integrator to design new systems that support business 
objectives, and to deliver and implement systems with a complete IT solution.

     SMP Architectures. With dramatic improvement in the power and 
price/performance characteristics of processors and the proven ability of SMP 
architectures to incorporate multiple processors into a single large-scale 
system or group of systems, customers are increasingly employing SMP systems 
to meet their commercial computing needs.  Sequent has thirteen years of 
success with SMP systems.  The adoption of SMP architectures by other major 
computer systems providers ensures continued acceptance of SMP in the 
commercial marketplace.  

     NUMA-Q Architectures.  For nearly a decade, SMP systems have been able to 
meet the demands for large-scale OLTP, DSS and business communications 
implementations.  However, the architecture of these systems can limit 
performance beyond a certain number of processors.  All of the processors in 
an SMP system are connected to each other and to memory and I/O by a single 
bus.  The bandwidth of the bus imposes limits on processing scalability, a 
significant penalty with the dramatically rising level of processor 
performance.  This limitation has prevented SMP nodes from increasing much 
beyond 32 processors.  As a result, Sequent realized that a new SMP 
architecture was required:  NUMA-Q.  NUMA-Q is the first CC-NUMA architecture 
for large-scale systems available to the commercial marketplace.  Sequent 
began shipment of NUMA-Q during the fourth quarter of 1996.

     Open Systems.  Historically, large organizations have relied upon 
computing equipment based upon a single vendor's proprietary technology that 
was generally incompatible with that of other vendors.  In recent years, 
proprietary systems have become increasingly unacceptable to companies that 
want the flexibility to purchase computing equipment and software best suited 
for a specific need without being constrained by the technology employed by a 
specific vendor.  Proprietary systems also make it difficult for the PC user 
to access information and applications from the central computer.  An open 
system, by contrast, incorporates industry standard technology and permits 
users to integrate computer equipment and software offered by different 
vendors.  An open systems environment also facilitates offloading applications 
from the central computer to a less expensive department, desktop or special-
purpose computer.  Many companies are replacing some or all of their 
proprietary central computing systems, moving to a more open, distributed 
system when they upgrade or expand their systems.  

     RDBMS and OLTP.  RDBMS is the primary vehicle for managing information in 
large organizations.  RDBMS systems are also used to support OLTP, which is 
increasingly replacing traditional batch processing of historical data in 
businesses with centralized information needs and distributed operations.  The 
OLTP market includes any systems that support the day-to-day operational 
processes of a corporation.  The market demand for OLTP computing systems, 
particularly those using RDBMS technology, spans a wide variety of industries 
and applications and has increased dramatically as more businesses require 
instantaneous processing of information.

     Rapid Growth in Desktop and Network Computing.   In recent years, 
companies have increasingly sought to improve the efficiency of their 
computing systems by integrating PCs with centralized computing resources to 
enable enterprise-wide communication, distributed processing and instantaneous 
access to enterprise information (database) and computing services 
(applications software).  Recently market introductions include "Thin Clients" 
or "Network Clients" which are lightweight desktop devices with little innate 
computing capability and no magnetic storage. The use of such devices as an 
alternative for PCs or ASCII terminals is expected to increase demand for 
larger back-end servers similar to those offered by Sequent. 

Sequent's Strategy 

     Sequent's strategy is to integrate the best technologies from across the 
industry in order to deliver scalable data center ready open systems 
solutions, including a comprehensive portfolio of migration services and 
offerings.  With the Company's new NUMA-Q architecture and an established set 
of partnerships with industry-leading technology vendors, Sequent's systems 
enable implementation of complex business applications that support customers' 
critical needs. 

     Migration to Open Systems.  Sequent concentrates on understanding the 
business objectives and IT needs of the customer at all organizational levels.  
The Company then works closely with the customer and suppliers of key 
technology components to design an open, integrated solution to meet the 
customer's computing needs.  The Company seeks to add value for the customer 
by teaming with them, or their designated systems integrator, to design an 
integrated system that directly supports the customer's business objectives 
and conforms to a sound architectural infrastructure including processing and 
data storage hardware, system software, applications and data center 
management services.  The Company focuses on large-scale organizations that 
have data center based information systems and are committed to migrating from 
a proprietary system environment to open systems.

     Leading-Edge Technologies.  Sequent's NUMA-Q systems, recognized as the 
industry's leading large-scale CC-NUMA platforms for the commercial 
marketplace, provide exceptional price/performance and scalability for RDBMS, 
core business and client/server applications.  The performance benefits of 
NUMA-based architectures, compared to standard SMP and single processor 
systems, are especially pronounced in transaction-intensive and decision 
support applications.  Sequent's NUMA-Q systems currently use Intel 
Pentium Pro processors and have been designed to incorporate up to 252 
processors in a single node. Sequent intends to maintain its leadership 
position in NUMA-Q systems, including upgrading to new Intel processor 
generations as they become available.

     Commitment to Open Systems.  Sequent's open system architecture leverages 
industry standards whenever possible, including the use of Intel processors, 
the UNIX and Windows NT operating systems, and standard network and 
communications interfaces. Sequent systems are designed to operate in a multi-
vendor heterogeneous environment and support a wide variety of third-party 
software, including open RDBMSs, packaged applications, and decision support 
tools and applications.

     "Partnering" with Leading Vendors.  Sequent devotes substantial resources 
to strategic marketing and product development relationships with those 
companies it believes offer the best open systems technologies.  Sequent has 
relationships with industry-leading systems management and tools vendors, such 
as Tivoli, Computer Associates, BMC and Hewlett Packard, in order to deliver a 
computing environment ready to run in customers' data centers.  The Company 
also has relationships with major providers of RDBMS software, including 
Oracle Corporation, Informix Software Inc., and Computer Associates.  Sequent 
also has strategic relationships with Intel for joint research and development 
of future computer hardware "building blocks"; with suppliers of other major 
operating systems, such as Microsoft for Windows NT; with major suppliers of 
communications and network software, including Novell; with emerging suppliers 
of client/server application development products such as Forte Software, 
Inc.; and with suppliers of third-party applications software such as Oracle, 
PeopleSoft, Baan and SAP.  

Platform Overview 

     Business automation and systems integration applications require 
extensive amounts of computing power, memory and disk storage throughput.  
Sequent systems are designed for customers with extensive computing 
requirements.  Sequent products are based on industry standards and are 
designed to easily combine with other computing hardware in an open systems 
environment.  Sequent systems enable customers to implement cost-effective 
computing, to automate business functions and to integrate enterprise-wide 
computing operations.  

     The Company's Symmetry systems, which start at two processors, are 
currently based on Intel Pentium processors and offer high levels of 
transaction processing and decision support performance.  The Company's NUMA-Q 
systems, which start at four processors and are based on Intel Pentium Pro 
processors, have shown performance and scalability capabilities expanded 
beyond the limitations of current single-bus SMP architecture.

     Sequent's processor-independent architecture allows the Company to 
incorporate technological advances in its product offerings more quickly and 
inexpensively than manufacturers of computer systems with proprietary central 
processing units.  The Company's ongoing product development efforts leverage 
advances in open systems technology, including processor enhancements, storage 
technology, communications and user-interface enhancements.  These 
enhancements directly benefit customers who can upgrade their installed 
Sequent systems without altering source programs, retraining users or 
replacing hardware and software not directly affected by the upgrade.  The new 
NUMA-Q systems  (NUMA-Q 2000) are binary compatible with Sequent's previous 
generation of systems, the Symmetry 5000.  Future processors will be offered 
for the NUMA-Q systems and will be binary compatible and function in the same 
systems as the current generation of processors.

     Sequent's Symmetry and NUMA-Q systems are based on an open system 
architecture that incorporates industry standards such as those in the UNIX 
operating system.  DYNIX/ptx, Sequent's version of UNIX, enhanced for SMP in 
the commercial marketplace, allows Sequent systems to provide nearly linear 
improvements in incremental performance as processors are added. DYNIX/ptx 
provides Sequent customers access to a growing array of UNIX software 
applications.  Sequent Symmetry and NUMA-Q systems used in network and 
client/server applications link PCs and department level and central computers 
to deliver applications and information to desktop PCs through network and PC 
interfaces, allowing users access to extensive processing power and 
information.  

     The Company's low-end and mid-range NT systems, which run Microsoft 
Windows NT operating system, are based on Intel Pentium processors. The 
Windows NT-based systems provide database and application services for 
workgroup, departmental and enterprise-level computing requirements.

     Operating Systems.  The Company is committed to support both the UNIX 
operating system and the emerging Windows NT system, which the Company 
believes will be the two major operating systems for open, enterprise-wide 
computing.  The Company's continuing leadership in the development of UNIX-
based SMP systems has been acknowledged by the industry's  leading developers 
of commercial UNIX systems software. 

     The Company continues to enhance the DYNIX/ptx operating system, 
currently as DYNIX/ptx 4.3 adding features to operate in mission critical 
environments.  The Company is currently developing DYNIX/ptx Version 4.4, 
which will be available in the second quarter of 1997.  These features include 
increased scalability and improved systems management and will support highly 
available systems and clusters.

     The Company has had ongoing technical discussions with Microsoft and 
other partners to extend the scalability, reliability and manageability of the 
Windows NT operating system and applications.   

Partnering with Leading Vendors 

     Relational Database Management Software.  Sequent has strategic marketing 
and development relationships with major independent providers of RDBMS 
software, including Oracle Corporation, Informix Software, Inc. and Computer 
Associates. Sequent's SMP architecture is designed to maximize the performance 
and scalability requirements for managing extensive amounts of computing power 
required by OLTP applications in conjunction with RDBMS software. In addition, 
this same technology, coupled with the emerging capabilities provided by 
Sequent's RDBMS partners, strengthens the decision support performance 
required by large-scale enterprises today.  Sequent has chosen to run its 
partners' software in support of its own enterprise needs. Sequent and these 
strategic partners join forces in joint development programs, joint marketing 
programs, and sales teaming efforts. The result is an exchange of technical 
personnel, dedicated marketing expertise and a highly trained sales 
organization to help sell the Company's and its partners' combined solutions.  

     Client/Server Application Software.  Sequent maintains strategic 
relationships with key software providers to assure the availability and 
maximum performance of pivotal software products on the Sequent platform.  
Sequent offers packaged and custom applications.

     Packaged Applications:  Packaged software applications provide a standard 
pre-engineered solution for a common set of functional business problems.  
Packaged applications offer the potential to trim the total cost of a 
solution, reduce the time required for implementation, and lower overall 
project risk.  Sequent maintains a number of strategic relationships with 
software partners who provide products in this area including Oracle, 
PeopleSoft, Baan and SAP.

     Custom Software Applications:  Custom software applications are developed 
using a variety of tools provided by software partners.  The applications are 
used in building custom solutions in situations where packaged applications do 
not meet business requirements or where customers desire to build systems for 
a competitive edge.  Sequent maintains a number of strategic relationships 
with software partners who provide products in this area including Oracle, 
Informix and Forte.

     Communications Products.  The Company's systems support communications 
products which allow Symmetry and NUMA-Q systems to interconnect in a 
multivendor systems environment.  These products include hardware which 
connect to wide and local area networks of different media and software which 
supports protocols for open and proprietary systems.  
 
     Sequent's communications products are differentiated by Parallel 
STREAMS Architecture which utilizes SMP architecture to produce high 
performance and scalable communications.  Parallel STREAMS are used for both 
low level communications media software to drive Ethernet, Token Ring, fiber 
distributed data interface ("FDDI") and synchronous lines as well as high 
level protocols.

     In addition to open systems communications using protocols such as 
TCP/IP, Open Systems Interconnections ("OSI") and X.25, Sequent communicates 
directly with IBM and DEC systems via Systems Network Architecture ("SNA") or 
DECnet/LAT protocols, respectively.  The Company interfaces with many other 
vendors utilizing these same protocols.  

     Sequent offers several high speed communications connections on the NUMA-
Q systems.  These include 100 Megabit-per-second Ethernet, CDDI (a copper wire 
version of FDDI), ATM, and high speed Synchronous E1/T1 which offer an order 
of magnitude increase to the bandwidth of previous offerings.

     Third-Party Applications Programs.  The rapidly expanding universe of 
applications software can be easily ported to Sequent's UNIX-based Symmetry 
and NUMA-Q multiprocessing systems.  The Company recognizes that applications 
software is a critical element in providing solutions to the enterprise and 
maintains marketing programs to promote the development and support of third-
party applications software packages for the Company's systems.  Currently, 
over 650 software application modules from approximately 300 vendors are 
available to Sequent users.  The software products offered drive core business 
applications in transaction-intensive, decision support, database technologies 
and development environments.  The software packages available address the 
needs of many different vertical markets, including manufacturing, 
telecommunications, health care, financial services and state and local 
governments.  To supplement the marketing efforts of the third-party 
suppliers, the Company actively promotes these software partners to end users 
through joint sales campaigns, demonstrations at its sales offices and trade 
shows, marketing collateral, and joint marketing programs.

     In addition, Sequent's NT systems support the thousands of software 
applications developed by third-party companies for the Microsoft Windows NT 
operating system.  

Sales and Distribution 

     The Company sells its products and services through worldwide direct and 
indirect distribution channels.  The primary sales channel in North America 
and Europe is through the direct sales force, increasingly in partnership with 
major systems integrators, while sales channels in Asia and the rest of the 
world are primarily through distributors.  The Company has 59 sales offices 
worldwide, including 33 in North America and 14 in Europe.  Indirect sales 
channels utilized by the Company include value-added resellers, original 
equipment manufacturers ("OEMs"), and foreign distributors.

     As is common in the computer industry, a significant portion of orders is 
generally received and shipped in the last month of a fiscal quarter.  As a 
result, the Company's product backlog is relatively small, is not necessarily 
indicative of sales levels for future periods and is not material to 
understanding the Company's business.

     The Company had no single customer that represented greater than 10% of 
total revenues in 1996, 1995 or 1994.  International sales were approximately 
55% of the Company's total revenues in 1996 and 1995 and 48% in 1994.

Competition 

     The computer industry is intensely competitive and characterized by rapid 
technological advances resulting in frequent new product introductions and 
improvements in performance.  Competitive factors include product quality and 
reliability, professional services capability, architectural fit, relative 
price/performance, ease of understanding and operation of the system, 
capability of the operating system software, availability of applications 
software, marketing capability, service and support, name recognition, and 
corporate reputation and longevity.

     Within the commercial segment of the general purpose computing market, 
Sequent competes against, among others, the major computer manufacturers 
including Hewlett-Packard, DEC, IBM and SUN.  The size, reputation, installed 
base and distribution strength of these companies make them significant 
competitors.  Sequent's Professional Services organization is closely aligned 
to its systems business.  Accordingly, it competes against the professional 
services organizations of its rival computer manufacturers, including, among 
others, SUN, Hewlett-Packard, DEC and IBM.  Sequent's Professional Services 
organization also competes to a lesser degree with small, localized consulting 
firms who offer tactical help in the areas of systems administration, database 
design and administration and other design services.  Although some of these 
competitors have financial, marketing, distribution and technical resources 
which significantly exceed those of the Company, the Company believes that it 
can compete favorably in the open systems marketplace based on its 
technological advancements, professional services expertise, price/performance 
and value to the customer.

Product Development 

     The Company's research and development programs are continually focused 
on advancing hardware and software technologies.  Sequent not only leverages 
the availability of processor technology from Intel, but also leverages 
systems management and backup/restore software products supplied by open 
systems vendors. Sequent adds high-end capabilities to these products to 
better satisfy customer needs.  

     In December of 1996, Sequent successfully introduced systems based on its 
new Cache Coherent Non-Uniform Memory Access (CC-NUMA) architecture.  
Sequent's CC-NUMA architecture (NUMA-Q) condenses four Intel Pentium Pro 
processors, memory and input/output ports into a single building block for 
increased performance and reliability.  These four-processor "quads" 
interconnect with the Company's IQ-Link technology which allows a large 
number of quads to become a distributed shared memory SMP system.  As with 
previous designs, the performance will scale nearly linearly as quads are 
added to a system. Sequent's NUMA-Q systems are expected to be both software 
compatible and clustered systems compatible with Sequent's existing Symmetry 
product line in the second quarter of 1997.  Sequent will continue to enhance 
the NUMA-Q product line to best meet market needs.

     The Company's software development program is focused on improving the 
performance of its parallel-enabled operating system, providing highly 
available clustering software, and enhancing its suite of communications, 
network and client/server and third-party applications software.  The Company 
intends to continue making substantial investments in research and development 
activities to maintain and enhance its competitive position in a market 
characterized by rapid technological advances.

Professional Services and Product Support 

          Sequent offers a wide range of professional services to ensure that 
every phase of a customer's project, from advance planning and architecture to 
technology deployment and ongoing systems support, is successful.  
Professional services include:  IT architecture and transition planning; DSS 
design and implementation; packaged OLTP installation and implementation (such 
as Oracle Financials & Manufacturing, SAP, Baan, and PeopleSoft applications); 
and enterprise management design and systems administration.   The Company's 
Professional Services group uses leading edge knowledge to deliver enterprise-
wide system solutions designed to meet customers' business requirements.  In 
addition, Sequent offers customers a comprehensive set of education and 
training programs.

     Sequent's Professional Services business is positioned to support 
traditional management consultants that perform business process analysis and 
re-engineering, such as Nola, Norton & Co., and McKinsey & Co., with Sequent's 
technical system integration skills.  The Company also teams with major 
systems integration companies and "Big 6" consulting firms such as  Electronic 
Data Systems Corp., Ernst & Young, and KPMG when developing IT solutions for 
large and complex system projects.  Both management consultants and technical 
system integration consultants are strategic components of the Company's 
success in delivery of services to its customers.

     The Company also offers an array of customer service and support 
programs, including hardware maintenance and service, software service and 
upgrades and documentation support.  In addition, hardware maintenance is 
offered for many third-party peripheral products connected to the Sequent 
system.  The Company maintains a 24-hour toll-free telephone line for 
technical consultation as well as remote log-in capability for diagnosing 
customer hardware and software problems.  In some cases,  in-field hardware 
service is contracted to third-party suppliers, which rely on Sequent for 
customer interface and diagnostic support.  The Company's standard warranty on 
its products generally extends 90 days from the date of customer installation.  

     The Company believes that the quality and reliability of its computer 
systems are important to customer satisfaction.  Sequent's systems have proven 
their high quality and reliability.  High system uptime is a built-in 
advantage of Sequent's architecture.  Sequent personnel perform all 
installations and hardware fault isolation and provide complete software 
support for direct customers.  Sequent systems are equipped with diagnostic 
tools that allow the Company's service engineers to identify, diagnose and 
repair a failed component from remote locations.  Replacement modules can be 
provided quickly to restore the system to full capacity.  The Company also 
offers service and support programs in system performance evaluation and 
disaster protection.  

     Revenue generated from services and support was 30%, 27% and 24% of total 
revenue during 1996, 1995 and 1994, respectively.  

Manufacturing 

     The Company's manufacturing operations consist of procurement, assembly, 
test and quality control.  Subcontractors are often used to assemble and test 
subassemblies, such as printed circuit boards.  The modular nature of the 
Company's products, together with the standards-based open architecture, 
permit ease of manufacture and system configuration.  Once integrated, all 
systems go through a fully operational, continuous burn-in cycle while 
executing rigorous system stress and diagnostic tests.  Final assembly and 
testing occur only when a specific customer order is due for shipment (because 
of the broad range of system configurations possible from a relatively few 
basic modules and the many choices of peripherals).  If a failure occurs or a 
problem of unknown origin arises during work-in-progress testing, it is the 
policy of the Company to halt shipment of products which may be affected while 
the Company isolates and corrects the problem and determines whether the 
problem may extend to other systems in manufacturing or at customer sites.  
Such interruptions could cause fluctuations in quarterly results.  

     The Company generally obtains most parts and components from one vendor, 
even where multiple sources are available, to maintain quality control and 
enhance the working relationship with suppliers.  These relationships include 
joint engineering programs for new product development.  The Company attempts 
to reduce the risk of supply interruption through close supplier relationships 
and greater inventory positions in certain sole-sourced components.  The 
failure of a supplier to deliver on schedule could delay or interrupt the 
Company's delivery of products and thereby adversely affect the Company's 
revenue and profits.

Patents and Licenses 

     Four U.S. and three United Kingdom patents have been issued to the 
Company.  The Company has filed ten additional U.S. patent applications and 
two foreign applications covering technology incorporated into its products, 
which are still pending.  The Company believes that the rapid pace of 
technological change in the computer industry makes patent protection less 
significant than factors such as its continued focus and efforts in research 
and product development, its technical expertise and the management ability of 
its personnel.  The Company has been made aware of others in the industry who 
assert exclusive rights to certain technologies, copyrights or trademarks, 
usually in the form of an offer to license certain rights for a fee or 
royalties.  The Company's policy is to evaluate such claims on a case-by-case 
basis.  The Company may seek to enter into licensing agreements with companies 
having or asserting rights to technologies if the Company concludes that such 
licensing arrangements are necessary or desirable.  There can be no assurance 
that the Company will be able to obtain such licenses or, if obtained, that 
such licenses will be on favorable terms.  

Employees 

     At December 28, 1996 the Company employed approximately 2,656 employees 
of whom approximately 268 were employed as sales executives, 1,459 in sales 
support, marketing and service, 466 in product development, 159 in 
manufacturing and 304 in administrative and support services.  The Company's 
continued success will depend in part on its ability to attract and retain 
highly skilled and motivated personnel who are in great demand throughout the 
industry.  None of the Company's employees is represented by a labor union.  
All full-time Sequent employees are granted options to acquire Common Stock of 
the Company.  Sequent believes that its employee relations are excellent and 
believes that its stock incentive plans, its challenging work environment and 
the opportunities for advancement within the Company are key factors to its 
ability to attract and retain qualified personnel.  

Trademarks

     Sequent, Symmetry, WinServer and DYNIX/ptx are registered trademarks 
and Parallel STREAMS, NUMA-Q and IQ-Link are trademarks of Sequent 
Computer Systems, Inc.  This Report on Form 10-K also refers to trademarks 
held by other corporations.

Forward-Looking Statements

     Information in this Report on Form 10-K that is not historical 
information, including information regarding product development schedules, 
constitutes forward-looking statements that involve a number of risks and 
uncertainties.  Additional forward-looking statements may be made by the 
Company from time to time.  The following factors are among the factors that 
could cause actual results to differ materially from the forward-looking 
statements:  timely completion of product development and customer acceptance 
of the Company's NUMA-Q product line; business conditions and growth in the 
electronics industry and general economies, both domestic and international; 
lower than expected customer orders, delays in receipt of orders or 
cancellation of orders; competitive factors, including increased competition, 
new product offerings by competitors and price pressures; the availability of 
third party parts and supplies at reasonable prices; changes in product mix 
and the mix between product and service revenue; significant quarterly 
performance fluctuations due to the receipt of a significant portion of 
customer orders and product shipments in the last month of each quarter; and 
product shipment interruptions due to manufacturing problems.  Any forward-
looking statements should be considered in light of these factors.

Item 2.   Properties.

     The Company's headquarters and its product development and manufacturing 
operations are located in facilities totaling approximately 560,000 square 
feet in Beaverton, Oregon, 10 miles west of Portland.  The Company occupies 
these facilities under leases which expire from 1999 to 2006.  On the 
expiration dates of these leases, the Company generally has the option of 
purchasing the leased facilities at fair market value or renewing the leases 
for an additional five years.  In addition, the Company owns 38.12 acres of 
undeveloped land in Beaverton held in anticipation of future facility growth 
requirements.  The Company also leases for sales, marketing and customer 
support offices in locations throughout the United States, Europe, Canada and 
Asia Pacific.  The Company anticipates that it will continue to expand its 
corporate and field facilities as business growth warrants.

Item 3.     Legal Proceedings.

     Not applicable.

Item 4.     Submission of Matters to a Vote of Security Holders.

     There are no material pending legal proceedings involving the Company.

Item 4(a).   Executive Officers of the Registrant.

Name                  Age   Position

Karl C. Powell, Jr.    53   Chairman and Chief Executive Officer, Director
John McAdam            46   President and Chief Operating Officer, Director
Robert S. Gregg        43   Sr. Vice President of Finance and Legal            
                              and Chief Financial Officer
Steve Chen             53   Executive Vice President of Product Group and 
                              Chief Technology Officer, Director
Andre Dahan            48   Sr. Vice President of World Wide Field Operations
                              and Marketing               

     Mr. Powell, a co-founder of the Company, is Chairman and Chief Executive 
Officer, and has been a director since 1983.  Mr. Powell has served as the 
Company's sole Chief Executive Officer or shared the Office of the Chief 
Executive with the co-founder of the Company since the Company's inception.  
From 1974 to 1983, Mr. Powell was employed by Intel Corporation, where his 
most recent position was General Manager for Microprocessor Operations.  Mr. 
Powell served on the National Board of Directors of the American Electronics 
Association from 1985 to 1986.  He holds a B.S. degree in mechanical 
engineering from the US Merchant Marine Academy.

     Mr. McAdam joined the Company in August 1989 as U.K. Sales Director.  He 
became U.K. General Manager in January 1991, Vice President and General 
Manager of European Operations in October 1992, and Senior Vice President of 
European and Asian Operations in January 1994.  He was promoted to President 
and Chief Operating Officer in February 1995, and was elected to the Board of 
Directors in November 1995.  Prior to joining the Company Mr. McAdam was 
employed for 10 years by Data General U.K. Ltd., serving most recently as 
Regional Manager, Public Sector, Finance and Government Market.  Mr. McAdam 
holds a B.Sc. first class honors degree in Computer Sciences from Glasgow 
University.

     Mr. Gregg joined the Company in 1983 as its Controller.  He became 
Director of Finance in 1984 and Vice President of Finance and Chief Financial 
Officer in March 1986.  He was promoted to Senior Vice President of Finance & 
Legal and Chief Financial Officer in February 1995.  Prior to joining the 
Company, Mr. Gregg spent eight years at the public accounting firm of Price 
Waterhouse LLP.  Mr. Gregg holds a B.S. degree in business and accounting from 
the University of Oregon.

     Dr. Chen joined the Company in 1996 as its Executive Vice President of 
Product Group and Chief Technology Officer and as a member of the Board of 
Directors.  Prior to joining the Company, Dr. Chen was a co-founder of 
SuperComputer International (SCI), later renamed Chen Systems, which was 
recently acquired by Sequent.  Prior to founding SCI, Dr. Chen was President 
and CEO of Supercomputer Systems, Inc. (SSI).  Previous to this, Dr. Chen was 
employed for eight years at Cray Research, Inc., serving most recently as 
Senior Vice President.  Dr. Chen holds a  Ph.D. in computing science from the 
University of Illinois, a M.S. degree in electrical engineering from Villanova 
University and a B.S. degree in electrical engineering from the National 
Taiwan University.

     Mr. Dahan joined the Company in 1996 as its Vice President of World Wide 
Marketing and was then promoted to Senior Vice President of World Wide Field 
Operations.  Prior to joining the Company, Mr. Dahan was employed as the Vice 
President of Marketing of AT&T's Global Information Solutions division.  Mr. 
Dahan holds a B.S. degree in computer science from Jerusalem Institute of 
Technology. 


                               PART II

Item 5.   Market for the Registrant's Common Equity and Related Stockholder 
          Matters.
          The information required by this item is included under "Market 
          Information (unaudited)" in the Company's 1996 Annual Report to 
          Shareholders and is incorporated herein by reference.

Item 6.   Selected Financial Data.
          Information with respect to selected financial data is included
          under "Selected Financial Data" in the Company's 1996 Annual Report
          to Shareholders and is incorporated herein by reference.

Item 7.   Management's Discussion and Analysis of Financial Condition and 
          Results of Operations.
          Information with respect to management's discussion and analysis of 
          financial condition and results of operations is included under 
          "Management's Discussion and Analysis of Financial Condition and 
          Results of Operations" in the Company's 1996 Annual Report to 
          Shareholders and is incorporated herein by reference.

Item 8.   Financial Statements and Supplementary Data.
          Information with respect to selected quarterly financial data is
          included under "Quarterly Financial Data (unaudited)" in the
          Company's 1996 Annual Report to Shareholders and is incorporated
          herein by reference.  The other information required by this item
          is included under "Consolidated Financial Statements" and "Notes
          to Consolidated Financial Statements" as listed in item 14 of this
          report and in the Company's 1996 Annual Report to Shareholders
          which is incorporated herein by reference.

Item 9.   Changes in and Disagreements with Accountants on Accounting and 
          Financial Disclosure.
          Not applicable.


                                   PART III

Item 10.  Directors and Executive Officers of the Registrant.
          Information with respect to directors of the Company will be included 
          under "Election of Directors" in the Company's Proxy Statement for 
          its 1997 Annual Meeting of Shareholders and is incorporated herein by 
          reference.  Information with respect to executive officers of the 
          Company is included under Item 4(a) of Part I of this Report.

Item 11.  Executive Compensation.
          Information with respect to executive compensation will be included
          under "Summary Compensation Table", "Stock Option Grants in Last
          Fiscal Year", "Stock Option Exercises in Last Fiscal Year and
          Fiscal Year End Option Values", "Repricing of Stock Options" under
          "Executive Compensation," and "Certain Transactions" in the
          Company's Proxy Statement for its 1997 Annual Meeting of
          Shareholders and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.
          Information with respect to security ownership of certain beneficial 
          owners and management will be included under "Voting Securities and 
          Principal Shareholders" and "Election of Directors" in the Company's 
          Proxy Statement for its 1997 Annual Meeting of Shareholders and is 
          incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions.
          Information with respect to transactions with management will be
          included under "Certain Transactions" in the Company's Proxy
          Statement for its 1997 Annual Meeting of Shareholders and is
          incorporated herein by reference.



                                 PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)(1)    Financial Statements.

          The following financial statements are included in the Company's 1996 
          Annual Report to Shareholders:

     
Sequent Computer Systems, Inc. and Subsidiaries:

Consolidated Statements of Operations - Fiscal Years Ended December 28, 1996, 
   December 30, 1995 and December 31, 1994     

Consolidated Balance Sheets - December 28, 1996 and December 30, 1995     

Consolidated Statements of Shareholders' Equity - Fiscal Years Ended December 
   28, 1996, December 30, 1995 and December 31, 1994

Consolidated Statements of Cash Flows  - Fiscal Years Ended December 28, 1996, 
   December 30, 1995 and December 31, 1994     

Notes to Consolidated Financial Statements     

Report of Independent Accountants     

(a)(2)    Financial Statement Schedules.

          The following schedules and report of independent accountants are
          filed herewith:

                                                           Page in this report
                                                               on Form 10-K

Schedule V     Property and Equipment                                F-1

Schedule VI    Accumulated Depreciation and Amortization
                 of Property and Equipment                           F-2

Schedule VIII  Valuation and Qualifying Accounts                     F-3

Schedule IX    Short-term Borrowings                                 F-4

Schedule X     Supplementary Income Statement Information            F-5

Report of Independent Accountants on Financial Statement Schedules   F-6

All other schedules are omitted as the required information is inapplicable or 
is presented in the financial statements or related notes thereto.


(a)(3)    Exhibits.

  Exhibit
  Number                       Description

   3.1     Articles of Incorporation, as amended, and Articles of 
           Merger of Sequent Computer Systems, Inc. (the "Company").  
           (Incorporated by reference to Exhibit 4A to the Company's 
           Registration Statement on Form S-8 (file no. 33-63972).)

   3.2     Bylaws, as amended, of the Company.  (Incorporated by 
           reference to Exhibit 4B to the Company's Registration 
           Statement on Form S-8 (file no. 33-39315).)

   4.1     Note Purchase Agreement dated April 10, 1992 regarding 
           7.5% Convertible Subordinated Notes due March 31, 2000, 
           between the Company and a group of institutional 
           investors.  (Incorporated by reference to Exhibit 19 to 
           the Company's Quarterly Report on Form 10-Q for the 
           quarter ended March 28, 1992).

           Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the 
           Company agrees to furnish any other long term debt 
           agreements to the Commission upon request.

  10.1A    Amended and Restated Lease Agreement between KC 
           Woodside and the Company, as amended, dated May 8, 1987 
           ("First Building Lease"), and related agreements.  
           (Incorporated by reference to Exhibit 19.1 to the 
           Company's Quarterly Report on Form 10-Q for the quarter 
           ended July 4, 1987 (file no. 0-15627).)

  10.1B    Second Amendment to First Building Lease, dated July 
           28, 1988.  (Incorporated by reference to Exhibit 10.3B to  
           the Company's Annual Report on Form 10-K for the fiscal 
           year ended December 30, 1989 (file no. 0-15627).)

  10.1C    Third Amendment to First Building Lease dated July 28, 
           1989.  (Incorporated by reference to Exhibit 10.3C to the  
           Company's Annual Report on Form 10-K for the fiscal year 
           ended December 30, 1989 (file no. 0-15627).)

  10.1D     Fourth Amendment to First Building Lease dated 
            September 20, 1991.  (Incorporated by reference to Exhibit 
            10.1D to the Company's Annual Report on Form 10-K for the 
            fiscal year ended December 28, 1991 (file no. 0-15627).)

  10.1E     Fifth Amendment to First Building Lease dated December 
            2, 1992.  (Incorporated by reference to Exhibit 10.1E to 
            the Company's Annual Report on Form 10-K for fiscal year 
            ended January 2, 1993 (file no. 0-15627).)

  10.1F     Sixth Amendment to First Building Lease dated April 5, 
            1993. (Incorporated by reference to Exhibit 10.1F to the 
            Company's Annual Report on Form 10-K for the fiscal year 
            ended January 1, 1994 (file no. 0-15627).)

  10.1G     Lease Agreement between KC Woodside and the Company, 
            dated May 8, 1987 ("Second Building Lease").  
            (Incorporated by reference to Exhibit 19.2 to the 
            Company's Quarterly Report on Form 10-Q for the quarter 
            ended July 4, 1987 (file no. 0-15627).)

  10.1H     First Amendment to Second Building Lease, dated July 
            28, 1988.  (Incorporated by reference to Exhibit 10.3E to 
            the Company's Annual Report on Form 10-K for the fiscal 
            year ended December 30, 1989 (file no. 0-15627).)

  10.1I     Second Amendment to Second Building Lease dated 
            September 13, 1991.  (Incorporated by reference to 
            Exhibit 10.1G to the Company's Annual Report on Form 10-K 
            for the fiscal year ended December 28, 1991 (file  no. 0-
            15627).)

  10.1J     Third Amendment to Second Building Lease, dated 
            December 2, 1992.  (Incorporated by reference to Exhibit 
            10.1L to the Company's Annual Report on Form 10-K for 
            fiscal year ended January 2, 1993 (file no. 0-15627).)

  10.1K     Fourth Amendment to Second Building Lease, dated April 
            5, 1993. (Incorporated by reference to Exhibit 10.1K to 
            the Company's Annual Report on Form 10-K for the fiscal 
            year ended January 1, 1994 (file no. 0-15627).)

  10.1L     Lease Agreement, dated July 28, 1988 between KC 
            Woodside and the Company ("Third Building Lease").  
            (Incorporated by reference to Exhibit 10.3F to the 
            Company's Annual Report on Form 10-K for the fiscal year 
            ended December 30, 1989 (file no. 0-15627).)

  10.1M     First Amendment to Third Building Lease, dated July 28, 
            1989.  (Incorporated by reference to Exhibit 10.3G to the 
            Company's Annual Report on Form 10-K for the fiscal year 
            ended December 30, 1989 (file no. 0-15627).)

  10.1N     Second Amendment to Third Building Lease dated 
            September 13, 1991.  (Incorporated by reference to 
            Exhibit 10.1J to the Company's Annual Report on Form 10-K 
            for the fiscal year ended December 28, 1991 (file no. 0-
            15627).)

  10.1O     Third Amendment to Third Building Lease, dated December 
            2, 1992.  (Incorporated by reference to Exhibit 10.1M to 
            the Company's Annual Report on Form 10-K for fiscal year 
            ended January 2, 1993 (file no. 0-15627).)

  10.1P     Fourth Amendment to Third Building Lease, dated April 
            5, 1993. (Incorporated by reference to Exhibit 10.1P to 
            the Company's Annual Report on Form 10-K for the fiscal 
            year ended January 1, 1994 (file no. 0-15627).)

  10.1Q     Lease Agreement, dated July 28, 1989 between KC 
            Woodside and the Company ("Fourth Building Lease").  
            (Incorporated by reference to Exhibit 10.3H to the 
            Company's Annual Report on Form 10-K for the fiscal year 
            ended December 30, 1989 (file no. 0-15627).)

  10.1R     First Amendment to Fourth Building Lease dated 
            September 13, 1991.  (Incorporated by reference to 
            Exhibit 10.1P to the Company's Annual Report on Form 10-K 
            for the fiscal year ended December 28, 1991 (file no. 0-
            15627).)
     
  10.1S     Second Amendment to Fourth Building Lease dated August 
            13, 1992.  (Incorporated by reference to Exhibit 10.1P to 
            the Company's Annual Report on Form 10-K for fiscal year 
            ended January 2, 1993 (file no. 0-15627).)

  10.1T     Third Amendment to Fourth Building Lease dated December 
            2, 1992.  (Incorporated by reference to Exhibit 10.1Q to 
            the Company's Annual Report on Form 10-K for fiscal year 
            ended January 2, 1993 (file no. 0-15627).)

  10.1U     Fourth Amendment to Fourth Building Lease dated April 
            5, 1993. (Incorporated by reference to Exhibit 10.1U to 
            the Company's Annual Report on Form 10-K for fiscal year 
            ended January 1, 1994 (file no. 0-15627).)

  10.1V     Triple Net Lease dated July 9, 1990 between KC Woodside 
            and the Company ("Fifth Building Lease").  (Incorporated 
            by reference to Exhibit 19 to the Company's Quarterly 
            Report on Form 10-Q for the quarter ended September 29, 
            1990 (file no. 0-15627).)

  10.1W     First Amendment to Fifth Building Lease dated April 29, 
            1991.  (Incorporated by reference to Exhibit 10.1N to the 
            Company's Annual Report on Form 10-K for the fiscal year 
            ended December 28, 1991 (file no. 0-15627).)

  10.1X     Second Amendment to Fifth Building Lease dated April 
            29, 1991.  (Incorporated by reference to Exhibit 10.1O to 
            the Company's Annual Report on Form 10-K for the fiscal 
            year ended December 28, 1991 (file no. 0-15627).)

  10.1Y     Third Amendment to Fifth Building Lease dated June 10, 
            1991.  (Incorporated by reference to Exhibit 10.1P to the 
            Company's Annual Report on Form 10-K for the fiscal year 
            ended December 28, 1991 (file no. 0-15627).)

  10.1Z     Fourth Amendment to the Fifth Building Lease dated July 
            3, 1991.  (Incorporated by reference to Exhibit 10.1Q to 
            the Company's Annual Report on Form 10-K for the fiscal 
            year ended December 28, 1991 (file no. 0-15627).)

  10.1aa    Fifth Amendment to Fifth Building Lease dated 
            September 13, 1991.  (Incorporated by reference to 
            Exhibit 10.1R to the Company's Annual Report on Form 10-K 
             for the fiscal year ended December 28, 1991 (file no. 0-
             15627).)

  10.1bb     Sixth Amendment to Fifth Building Lease dated December 
             2, 1992.  (Incorporated by reference to Exhibit 10.1X to 
             the Company's Annual Report on Form 10-K for fiscal year 
             ended January 2, 1993 (file no. 0-15627).)

  10.1cc     Seventh Amendment to Fifth Building Lease dated April 
             5, 1993. (Incorporated by reference to Exhibit 10.1cc to 
             the Company's Annual Report on Form 10-K for fiscal year 
             ended January 1, 1994 (file no. 0-15627).)

  10.1dd     Lease Agreement between KC Woodside and the Company, 
             dated June 10, 1991 (Umpqua).  (Incorporated by reference 
             to Exhibit 10.1Y to the Company's Annual Report on Form 
             10-K for fiscal year ended January 2, 1993 (file no. 0-
             15627).)

  10.1ee     Lease Agreement between KC Woodside and the Company, 
             dated June 10, 1991 (Charles).  (Incorporated by 
             reference to Exhibit 10.1Z to the Company's Annual Report 
             on Form 10-K for fiscal year ended January 2, 1993 (file 
             no. 0-15627).)

  10.1ff     First Amendment to Lease, dated October 31, 1991 
             (Charles).  (Incorporated by reference to Exhibit 10.1aa  
             to the Company's Annual Report on Form 10-K for fiscal 
             year ended January 2, 1993 (file no. 0-15627).)

  10.1gg     Second Amendment to Lease, dated May 6, 1992 
             (Charles).  (Incorporated by reference to Exhibit 10.1bb 
             to the Company's Annual Report on Form 10-K for fiscal 
             year ended January 2, 1993 (file no. 0-15627).)

  10.1hh     Third Amendment to Lease, dated January 8, 1993 
             (Charles).  (Incorporated by reference to Exhibit 10.1cc 
             to the Company's Annual Report on Form 10-K for fiscal 
             year ended January 2, 1993 (file no. 0-15627).)

  10.1jj     Lease Agreement between KC Woodside and the Company, 
             dated June 10, 1991 (S. Platte). (Incorporated by 
             reference to Exhibit 10.1dd to the Company's Annual 
             Report on Form 10-K for fiscal year ended January 2, 1993 
             (file no. 0-15627).)

  10.1kk     First Amendment to Lease, dated May 12, 1992 
             (Guadalupe). (Incorporated by reference to Exhibit 10.1ff 
             to the Company's Annual Report on Form 10-K for fiscal 
             year ended January 2, 1993 (file no. 0-15627).)

  10.1ll     Business park Lease between KC Woodside and the 
             Company, dated June 10, 1991 (Hillsborough). 
             (Incorporated by reference to Exhibit 10.1gg to the 
             Company's Annual Report on Form 10-K for fiscal year 
             ended January 2, 1993 (file no. 0-15627).)

  10.1mm     Fourth Amendment to Lease, dated July 21, 1995 
             (Charles).  (Incorporated by reference to Exhibit 10.1dd 
             to the Company's Annual Report on 10-K for fiscal year 
             ended January 2, 1993 (file no. 0-15627).)

  10.1nn     First Amendment to Lease, dated July 21, 1995 (South 
             Platte).  (Incorporated by reference to Exhibit 10.1ee to 
             the Company's Annual Report on Form 10-K for fiscal year 
             ended January 2, 1993 (file no. 0-15627).)

  10.1oo     Second Amendment to Lease, dated July 21, 1995 
             (Guadalupe).  (Incorporated by reference to Exhibit 10.gg 
             to the Company's Annual Report on Form 10-K for fiscal 
             year ended January 2, 1993 (file no. 0-15627).)

  10.1pp     Lease Agreement between KC Woodside and the Company, 
             dated January 15, 1996 (Guadalupe), as amended March 1, 
             1996 and October 1, 1996.

  10.2       Master Software License Agreement between Unix System 
             Laboratories, Inc. (formerly owned by American Telephone 
             & Telegraph Company) and the Company, dated effective as 
             of April 18, 1985. (Incorporated by reference to Exhibit 
             10.2 to the Company's Annual Report on Form 10-K for 
             fiscal year ended January 2, 1993 (file no. 0-15627).)

  10.2A     Sublicensing Agreement dated January 28, 1986, as 
            amended June 22, 1987 and August 10, 1987. (Incorporated 
            by reference to Exhibit 10.2A to the Company's Annual 
            Report on Form 10-K for fiscal year ended January 2, 1993 
            (file no. 0-15627).)

  10.2B     Substitution Agreement between Unix System 
            Laboratories, Inc. and the Company, dated January 28, 
            1986. (Incorporated by reference to Exhibit 10.2B to the 
            Company's Annual Report on Form 10-K for fiscal year 
            ended January 2, 1993 (file no. 0-15627).)

  10.2C     Amendment dated November 13, 1992 to Master Software 
            License Agreement and Sublicensing Agreement with Unix 
            System Laboratories, Inc.

  10.2D     License Agreement dated July 15, 1983 between The 
            Regents of University of California and the Company, as 
            amended July 2, 1986. (Incorporated by reference to 
            Exhibit 10.2C to the Company's Annual Report on Form 10-K 
            for fiscal year ended January 2, 1993 (file no. 0-
            15627).)

  + 10.3    Distributorship Agreement between the Company and 
            Oracle Corporation, dated March 31, 1987, as amended on 
            December 29, 1988, August 30, 1989, May 28, 1990, May 31, 
            1991 and June 30, 1991.  (Incorporated by reference to 
            Exhibit 10.3 to Amendment No. 1 to the Company's Annual 
            Report on Form 10-K for fiscal year ended January 2, 1993 
           (file no. 0-15627).)

  * 10.4    Aircraft Lease Agreement between the Company and 
            B&K Transportation, Inc., dated October 1, 1993, as 
            amended November 1, 1993 and December 12, 1994. 
            (Incorporated by reference to Exhibit 10.4 to the 
            Company's Annual Report on Form 10-K for fiscal year 
            ended December  31, 1994 (File no. 0-15627).)

  * 10.4A   Aircraft Lease Agreement between the Company and 
            CP Transportation, Inc., dated October 1, 1996.

  * 10.5     Sequent Computer Systems, Inc. Incentive Stock 
             Option Plan and Nonstatutory Stock Option Plan adopted 
             March 20, 1984, as amended.  (Incorporated by reference 
             to Exhibit 10.10 to the Company's Registration Statement 
             on Form S-1 (File no. 33-33444).)

  * 10.6     Sequent Computer Systems, Inc. 1987 Employee Stock 
             Option Plan, as amended. (Incorporated by reference to 
             Exhibit 10.11 to the Company's Registration Statement on 
             Form S-1 (File no. 33-33444).)

  * 10.7     Sequent Computer Systems, Inc. 1987 Nonstatutory 
             Stock Option Plan, as amended. (Incorporated by reference 
             to Exhibit 10.12 to the Company's Registration Statement 
             on Form S-1 (File no. 33-33444).)

  * 10.8     Sequent Computer Systems Inc. Restated Employee 
             Stock Purchase Plan. (Incorporated by reference to 
             Appendix A to the Company's Proxy Statement dated March 
             18, 1993).

  * 10.9     Sequent Computer Systems, Inc. 1989 Stock 
             Incentive Plan, as amended.  (Incorporated by reference 
             to Appendix A to the Company's Proxy Statement for its 
             1994 Annual Meeting of Shareholders).

    10.10    Agreement between American International 
             Motorsports (AI Motorsports) and Sequent Computer 
             Systems, Inc., dated January 30, 1996.

  * 10.11     DP Applications, Inc. 100% Convertible Note dated 
              August 20, 1996 in favor of Robert W. Wilmot and Mary J. 
              Wilmot, trustees of the RW & MJ Wilmot Living Trust, 
              U/D/T dated April 18, 1995 (the "Wilmot Trust") and DP 
              Applications, Inc. Warrant for the Purchase of Shares of 
              Capital Stock dated August 20, 1996 in favor of Robert W. 
              Wilmot and Mary J. Wilmot, trustees of the RW & MJ Wilmot 
              Living Trust U/D/T dated April 18, 1995.

  * 10.12     DP Applications, Inc. Restricted Stock Purchase 
              Agreement dated December 2, 1996.

    11        Statement regarding computation of earnings per share.

    13        1996 Annual Report to Shareholders (portions not incorporated
              by reference are not deemed filed).

    21        Subsidiaries.

    23        Consent of Independent Public Accountants.

    24        Powers of Attorney.

    27        Financial Data Schedule.
________________________

   +          Confidential treatment for portions of this contract has been 
              previously requested of the Commission.

   *          Management contract or compensatory plan or arrangement
              required to be filed as an exhibit pursuant to Item 14(a) (3)
              of this Report.

     (b)      Reports on Form 8-K.

              No reports on Form 8-K were filed by the Company during the 
              last quarter of fiscal 1996.


                                SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                   Sequent Computer Systems, Inc.

Date:  March 25, 1997              By: /s/ Robert S. Gregg
                                       Robert S. Gregg
                                       Sr. Vice President of Finance
                                       and Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities indicated on March 27, 1996.

        Signature                               Title

   /s/ Karl C. Powell, Jr.       Chairman and Chief Executive Officer
   (Karl C. Powell, Jr.)         and Director (Principal Executive Officer)
     

   /s/ Robert S. Gregg            Sr. Vice President of Finance and Legal
  (Robert S. Gregg)               and Chief Financial Officer
                                  (Principal Accounting and Financial Officer)

   /s/ Steve Chen                 Director
   (Steve Chen)          

   /s/ John McAdam                Director
   (John McAdam)          
          
   DAVID R. HATHAWAY        *     
   (David R. Hathaway)            Director

   ROBERT C. MATHIS         *     
   (Robert C. Mathis)             Director

   MICHAEL S. SCOTT MORTON  *     
   (Michael S. Scott Morton)      Director

   RICHARD C. PALERMO       *     
   (Richard C. Palermo)           Director

   ROBERT W. WILMOT         *     
   (Robert W. Wilmot)             Director


   By: /s/ Robert S. Gregg  *
      Robert S. Gregg, Attorney-in-fact


<TABLE>
                                                                                   SCHEDULE V

                          SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                                    PROPERTY AND EQUIPMENT (1)
                                         (In thousands) 

<CAPTION>

                            Balance at                                              Balance at
                           Beginning of   Additions                 Other Charges     End of   
                              Period       at Cost    Retirements   Add (Deducts)     Period        
<S>                        <C>           <C>          <C>           <C>             <C>
Year ended Dec. 31, 1994
  Land                      $   5,037     $      0     $      0        $  0         $   5,037
  Operational equipment        95,895       38,053       14,413           0           119,535
  Furniture and equipment      46,643       14,875        7,646           0            53,872
  Leasehold improvements       11,193        1,707          559           0            12,341
                            $ 158,768     $ 54,635     $ 22,618        $  0         $ 190,785

Year ended Dec. 30, 1995
  Land                      $   5,037     $      0     $      0        $  0         $   5,037
  Operational equipment       119,535       25,162        9,800           0           134,897
  Furniture and equipment      53,872       14,499        1,361           0            67,010
  Leasehold improvements       12,341        3,711           78           0            15,974
                            $ 190,785     $ 43,372     $ 11,239        $  0         $ 222,918

Year ended Dec. 28, 1996
  Land                      $   5,037     $      0     $      0        $  0         $   5,037
  Operational equipment       134,897       59,356       19,591           0           174,662
  Furniture and equipment      67,010       29,375        6,434           0            89,951
  Leasehold improvements       15,974        6,728          118           0            22,584
                            $ 222,918     $ 95,459     $ 26,143        $  0         $ 292,234



(1)  Depreciation and amortization is provided on a straight-line basis 
     over the estimated life as follows:

     Operational equipment     3 to 5 years
     Furniture and equipment   3 to 5 years
     Leasehold improvements    5 to 10 years

                                                                                     SCHEDULE VI

                         SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                            ACCUMULATED DEPRECIATION AND AMORTIZATION
                                    OF PROPERTY AND EQUIPMENT
                                          (In thousands) 


<CAPTION>
                                           Additions          
                            Balance at     Charged to   Retirements       Other         Balance at
                            Beginning of   Costs and     Charged to      Charges          End of   
                               Period      Expenses     Other Accts.   Add (Deducts)      Period          
<S>                         <C>            <C>          <C>            <C>              <C>
Year ended Dec. 31, 1994
  Operational equipment      $  41,321     $ 19,370      $  5,060          $  0         $  55,631
  Furniture and equipment       27,456       13,810         5,524             0            35,742
  Leasehold improvements         3,682        1,613            97             0             5,198
                             $  72,459     $ 34,793      $ 10,681          $  0         $  96,571

Year ended Dec. 30, 1995
  Operational equipment      $  55,631     $ 18,183      $  2,339          $  0         $  71,475
  Furniture and equipment       35,742       12,490         2,389             0            45,843
  Leasehold improvements         5,198        2,291            54             0             7,435
                             $  96,571     $ 32,964      $  4,782          $  0         $ 124,753

Year ended Dec. 28, 1996
  Operational equipment      $  71,475     $ 21,246      $  8,839          $  0         $  83,882
  Furniture and equipment       45,843       20,738         2,343             0            64,238
  Leasehold improvements         7,435        2,959           118             0            10,276
                             $ 124,753     $ 44,943      $ 11,300          $  0         $ 158,396



                                                                                SCHEDULE VIII

                          SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                                 VALUATION AND QUALIFYING ACCOUNTS
                                          (In thousands) 


<CAPTION>
                                         Additions     Additions
                          Balance at     Charged to    Charged to    Write-offs   Balance at
                          Beginning of   Costs and    Other Accts.     Net of       End of   
                             Period      Expenses     Describe (1)   Recoveries     Period         
<S>                       <C>            <C>          <C>            <C>          <C>
Year ended Dec. 31, 1994
  Allowance for doubtful     
    accounts                $  1,781     $    898       $     9       $    355     $  2,333
  Accumulated amortization     
    capitalized software    $ 28,912     $ 12,778       $     0       $      0     $ 41,690

Year ended Dec. 30, 1995
  Allowance for doubtful
    accounts                $  2,333     $  1,089       $   (18)      $    588     $  2,816
  Accumulated amortization
    capitalized software    $ 41,690     $ 16,618       $     0       $      0     $ 58,308

Year ended Dec. 28, 1996
  Allowance for doubtful
    accounts                $  2,816     $    317       $  (315)      $     12     $  2,806
  Accumulated amortization
    capitalized software    $ 58,308     $ 19,984       $     0       $ 39,846     $ 38,446


(1) Foreign currency translation adjustment

                                                                              SCHEDULE IX

                         SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                                     SHORT-TERM BORROWINGS
                                        (In thousands) 


<CAPTION>
                                                  Maximum      Average       Weighted
                                      Weighted     Amount       Amount       Average
                          Balance at   Average   Outstanding  Outstanding  Interest Rate
                            End of    Interest   During the   During the    During the   
                            Period      Rate       Period       Period      Period (1)          
<S>                       <C>         <C>        <C>          <C>          <C>         
Year ended Dec. 31, 1994
  Notes payable to bank    $ 59,437     5.5%      $ 59,437     $ 44,772       5.6%

Year ended Dec. 30, 1995
  Notes payable to bank    $ 41,146     5.5%      $ 61,529     $ 47,155       6.3%

Year ended Dec. 28, 1996
  Notes payable to bank    $ 59,925     5.6%      $ 78,725     $ 36,781       5.2%


(1) The weighted average interest rate during the period is calculated 
    using monthly weighted averages.


                                                                           SCHEDULE X
     
              SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                 SUPPLEMENTARY INCOME STATEMENT INFORMATION
                               (In thousands) 

<CAPTION>
                                                 Fiscal Year Ended               
                                       Dec. 28,       Dec. 30,       Dec. 31,
                                          1996           1995           1994          
<S>                                    <C>            <C>            <C>
Depreciation and amortization:
  Depreciation                         $ 44,943       $ 34,972       $ 31,822     
  Capitalized software amortization      19,984         16,618         12,778     
  Goodwill amortization                     607            504            536     
      Total                            $ 65,534       $ 52,094       $ 45,136     

Royalties                              $ 12,139       $ 10,141          6,374     

Advertising                            $ 16,674       $ 11,358       $ 11,674

</TABLE>

                  REPORT OF INDEPENDENT ACCOUNTANTS
                  ON FINANCIAL STATEMENT SCHEDULES



To the Board of Directors of
Sequent Computer Systems, Inc.



Our audits of the consolidated financial statements referred to in our report 
dated January 23, 1997 appearing in the 1996 Annual Report to Shareholders of 
Sequent Computer Systems, Inc. (which report and consolidated financial 
statements are incorporated by reference in this Annual Report on Form 10-K) 
also included an audit of the Financial Statement Schedules listed in Item 
14(a)(2) of this Form 10-K.  In our opinion, these Financial Statement 
Schedules present fairly, in all material respects, the information set forth 
therein when read in conjunction with the related consolidated financial 
statements.



PRICE WATERHOUSE LLP

Portland, Oregon
January 23, 1997



                                                               EXHIBIT 11

             SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                 STATEMENT SHOWING CALCULATION OF AVERAGE
                  COMMON SHARES OUTSTANDING AND EARNINGS
                         PER AVERAGE COMMON SHARE 
                 (In thousands, except per share amounts) 




                                   Three Months Ended        Year Ended     
                                    December 28, 1996     December 28, 1996

Weighted average number
  of common shares outstanding            34,026                33,641

Application of the "treasury stock"
  method to the stock option and
  employee stock purchase plans (A)        2,309                   834

Weighted average of common stock
  equivalent shares attributable to
  convertible debentures                     575                   575

  Total common and common
    equivalent shares, assuming
    full dilution                         36,910                35,050



Net income                             $   2,512             $   7,771

Add:
  Interest on convertible debentures,
  net of applicable income taxes             125                   500

Net income, assuming full dilution     $   2,637             $   8,271

Net income per common share,
  assuming full dilution (B)           $     .07             $     .23



(A) Effective with the third quarter of 1996, the Company applied the 
    "Modified Treasury Stock" method to calculate outstanding shares for
    stock options in accordance with APB 15.  

(B) In accordance with generally accepted accounting principles, fully-
    diluted earnings per share may not exceed primary earnings per share.

The computation of primary net income per common share is not included as the 
computation can be clearly determined from the material contained in this 
report.


<TABLE>
                                                                              EXHIBIT 13



                            SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                                       SELECTED FINANCIAL DATA 
                               (In thousands, except per share amounts) 
<CAPTION>

                                                              Fiscal Year Ended          
                                       Dec 28,      Dec. 30,      Dec. 31,       Jan. 1,       Jan. 2,     
                                         1996          1995          1994          1994          1993
<S>                                   <C>           <C>           <C>           <C>           <C>
OPERATIONS DATA

Total revenue                         $ 595,362     $ 540,345     $ 450,823     $ 353,806     $ 307,274
Income (loss) before income taxes     $  10,676     $  47,327     $  38,800     $  (6,331)    $  15,884     
Net income (loss)                     $   7,771     $  35,073     $  33,134     $  (7,524)    $  14,433     
Net income (loss) per share           $     .23     $    1.04     $    1.03     $    (.26)    $     .55     
Average shares outstanding               34,254        33,665        32,028        29,335        26,120     

BALANCE SHEET DATA

Working capital                       $ 183,428     $ 214,749     $ 168,468     $ 134,156     $  86,914     
Total assets                          $ 612,009     $ 503,923     $ 435,977     $ 375,424     $ 278,759     
Long-term obligations                 $  16,503     $   9,106     $  10,341     $  10,906     $  24,034     
Shareholders' equity                  $ 374,809     $ 353,188     $ 291,195     $ 243,488     $ 172,502     

</TABLE>

            SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
                        RESULTS OF OPERATIONS 


OVERVIEW 

     Total revenue was $595.4 million in 1996 compared to $540.3 million in 
1995 and $450.8 million in 1994.  The Company recorded net income in 1996 of 
$7.8 million, compared to $35.1 million in 1995 and $33.1 million in 1994.  
The Company's total revenue for 1996 represents a 10% increase over 1995 and 
is attributed to significant increases in customer and professional service 
revenues in 1996 over 1995.  The Company's service revenue increased 25% in 
1996 over 1995 as a result of a growing number of customer installation bases 
and related service contracts, as well as an increase in the number of 
project-based sales.  The decrease in net income in 1996 compared to 1995 is 
the result of the heavy investment made in 1996 to bring the next-generation 
NUMA-Q product to market in December 1996 and expand the sales and 
professional services organizations to leverage the capability of the new 
technology.
     

RESULTS OF OPERATIONS 

     The following table sets forth certain operating data as a percentage of 
total revenue: 
                                        
                                               Fiscal Year Ended     
                                     December 28,  December 30,  December 31, 
                                        1996          1995          1994
Revenue:                                                                     
  End-user products                     68.5%         69.4%        70.6%     
  OEM products                           1.1           3.9          5.1
  Service                               30.4          26.7         24.3      
    Total revenue                      100.0         100.0        100.0     
Cost of products and service            56.7          54.8         53.7       
Gross profit                            43.3          45.2         46.3     
Operating expenses:                                                            
  Research and development               9.0           7.5          7.8     
  Selling, general and administrative   32.1          28.7         29.7     
    Total operating expenses            41.1          36.2         37.5       
Operating income                         2.2           9.0          8.8     
Interest income (expense), net           0.0           0.2         (0.3)     
Other income (expense), net             (0.4)         (0.4)         0.1      
Income before provision 
  for income taxes                       1.8           8.8          8.6     
Provision for income taxes               0.5           2.3          1.3      
Net income                               1.3%          6.5%         7.3     


REVENUE 

     End-user product revenue increased $32.8 million, or 9%, from 1995 to 
1996 and $56.7 million, or 18%, from 1994 to 1995.  These increases have been 
primarily in the Company's North American and Asia Pacific geographies.  The 
revenue growth rate from 1995 to 1996 was impacted by the Company's product 
transition from its Symmetry line to its next-generation NUMA-Q systems, 
especially in the second half of 1996.  Despite the ongoing demand for 
Symmetry systems which are binary compatible with the NUMA-Q technology, the 
awareness of the pending release of the new product adversely affected 
Symmetry sales during 1996.  Volume shipments of NUMA-Q began late in the 
fourth quarter of 1996.

     As anticipated, total OEM revenue continued to decline in 1996 compared 
to 1995 and 1994 due to decreases in revenue from Unisys Corporation.  Total 
OEM revenue in 1996 and 1995 was $6.5 million and $20.9 million, respectively, 
compared to $23.1 million in 1994.

     During 1996 and 1995, the Company's customer and professional service 
revenue continued to increase in dollar amount and as a percentage of total 
revenue primarily due to the growth in customer installation bases and 
associated customer service/maintenance contracts, as well as a focus on 
selling more solutions. 

     The Company has continued to benefit from its significant investment in 
developing worldwide sales and distribution channels.  International revenue 
as a percentage of total revenue was 55% in 1996 and 1995, increasing from 48% 
in 1994.  The majority of the international revenue is from Europe 
(particularly the United Kingdom), with the balance coming from Asia-Pacific 
and Canada.


COST OF SALES
                                                 Fiscal Year Ended     
                                      December 28,  December 30,  December 31,
                                          1996          1995          1994     

Cost of products sold as a percentage 
  of product revenue                       48%           48%           48%     
Cost of service as a percentage 
  of service revenue                       77            75            71     
Total cost of sales as a percentage 
  of total revenue                         57            55            54     


     The factors influencing gross margins in a given period include unit 
volumes (which affect economies of scale), product configuration mix, changes 
in component and manufacturing costs, product pricing and the mix between 
product and service revenue. 

     Total cost of sales as a percentage of total revenue increased both in 
1996 and 1995 primarily due to lower margin service increasing as a percentage 
of total revenue.  As planned, the Company invested in expanding its 
professional service organization which has contributed to the overall 
increase of cost of service as a percentage of service revenue.  The Company 
increased headcount in its professional service organization by approximately 
38% in 1996.  


RESEARCH AND DEVELOPMENT

(dollars in millions)                          Fiscal Year Ended     
                                  December 28,    December 30,    December 31,
                                      1996            1995            1994     

Research and development expense     $53.7           $40.9           $35.0     
As a percentage of total revenue       9%              8%              8%

Software costs capitalized           $34.2           $23.4           $19.1


     Research and development expense increased 31% in 1996 compared to 1995 
and 17% in 1995 compared to 1994.  The Company continued to invest 
significantly in its new NUMA-Q architecture and software development, in 
addition to ongoing enhancements to existing products.  Consistent with 
management's plans, the NUMA-Q products began shipping in the Company's fourth 
quarter.  Research and development costs as a percentage of total revenue were 
approximately 9% in 1996, compared to 8% for 1995 and 1994.  Management 
intends to make significant investments during 1997 as it continues to enhance 
its NUMA-Q product line.

     Capitalized software amortization was approximately $20.0 million, $16.6 
million, and $12.8 million in 1996, 1995 and 1994, respectively.  The Company 
has continued to increase its focus on software design for computing solutions 
and its next-generation products, resulting in greater investments in software 
development and products.     


SELLING, GENERAL AND ADMINISTRATIVE

(dollars in millions)                           Fiscal Year Ended     
                                   December 28,    December 30,    December 31,
                                       1996            1995            1994     

Selling, general and administrative   $191.1          $155.0          $134.1  
As a percentage of total revenue        32%             29%             30%


     The Company's selling, general and administrative costs increased both in 
dollars and as a percentage of revenue in 1996, as the Company made 
significant investments in its worldwide sales force for successful delivery 
of NUMA-Q at the end of 1996.  During the year, the Company increased the 
number of sales teams by 54% worldwide.


INTEREST AND OTHER, NET

(dollars in millions)                       Fiscal Year Ended     
                              December 28,     December 30,     December 31,
                                 1996             1995             1994     

Interest income                  $3.0             $5.3             $3.5     
Interest expense                 $3.2             $4.2             $4.7

Other income (expense), net     $(2.0)           $(2.3)            $0.5


     Interest income is primarily generated from restricted deposits held at 
foreign and domestic banks, short-term investments and cash and cash 
equivalents.  Interest expense includes costs related to convertible 
debentures, foreign currency hedging loans, interim short-term borrowings and 
capital lease obligations.

     Other expense consists primarily of net gains and losses on sales of 
assets and discount on sale of receivables.


INCOME TAXES

     The Company provided $2.9 million for income taxes in 1996 on a net 
profit before tax of $10.7 million.  The difference between the statutory rate 
and the effective tax rate is principally due to the benefit from the 
Company's Foreign Sales Corporation.  The 1996 effective tax rate of 27.2% 
compares to effective rates of 25.9% in 1995 and 14.6% in 1994.


LIQUIDITY AND CAPITAL RESOURCES

     Working capital was $183.4 million at December 28, 1996 compared to 
$214.7 million at December 30, 1995.  The Company's current ratio at December 
28, 1996 and December 30, 1995 was 1.9:1 and 2.5:1, respectively.

     Although net cash provided by operations for the year ended December 28, 
1996 totaled $64.1 million, cash and cash equivalents decreased by $24 
million.  The Company continued to make significant investments in property 
and equipment ($80.6 million), inventory ($13.6 million) and capitalized 
software ($34.2 million), primarily related to product and software 
development associated with its new NUMA-Q product line.  Other investments 
included approximately $27 million in software licenses resulting from a long-
term strategic partner alliance, of which approximately $15 million is 
included in prepaid royalties and other current assets.  Other sources of 
funds included net proceeds of stock issuances ($11 million), notes payable 
($18.8 million) and capital lease transactions ($14.7 million).

     The Company has a $20 million receivable sales facility with a group of 
banks.  At December 28, 1996, accounts receivable in the accompanying 
consolidated balance sheet is net of $20 million received by the Company under 
this agreement to sell its domestic accounts receivable.

     The Company maintains a $70 million revolving line of credit agreement.  
The line is unsecured and extends through May 30,1997.  The line contains 
certain financial covenants and prohibits the Company from paying dividends 
without the lenders' consent.  As of December 28, 1996, $12.2 million was 
outstanding under the line of credit.

     The Company maintains a short-term borrowing agreement with a foreign 
bank to cover foreign currency exposures.  Maximum borrowings allowed under 
the foreign bank agreement were $57.2 million, of which $44.7 million was 
outstanding at December 28, 1996 (based on currency exchange rates on such 
date).

     The Company also maintains miscellaneous borrowing arrangements with a 
foreign bank.  At December 28, 1996, amounts outstanding under this agreement 
totaled $870,000.

     In addition to the above, a subsidiary of the Company issued short-term 
convertible notes during 1996 totaling $2.2 million, which were outstanding at 
December 28, 1996.

     Management expects that current funds, funds from operations and the bank 
lines of credit will provide adequate resources to meet the Company's 
anticipated operational cash requirements during 1997.


FORWARD-LOOKING STATEMENTS

     The Chairman's Letter, Management's Discussion and Analysis of Financial 
Condition and Results of Operations and other sections of this Annual Report 
contain information regarding growth expectations, market size, planned 
expenditure levels and comments relating to technology development and 
resulting release of future products.  These statements are forward-looking 
statements that involve a number of risks and uncertainties.  Additional 
forward-looking statements may be made by the Company from time to time.  The 
following factors are among the factors that could cause actual results to 
differ materially from the forward-looking statements:  timely completion of 
product development and customer acceptance of the Company's NUMA-Q product 
line; business conditions and growth in the electronics industry and general 
economies, both domestic and international; lower than expected customer 
orders, delays in receipt of orders or cancellation of orders; competitive 
factors, including increased competition, new product offerings by competitors 
and price pressures; the availability of third party parts and supplies at 
reasonable prices; changes in product mix and the mix between product and 
service revenue; significant quarterly performance fluctuations due to the 
receipt of a significant portion of customer orders and product shipments in 
the last month of each quarter; and product shipment interruptions due to 
manufacturing problems.

<TABLE>

                    SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except per share amounts) 

<CAPTION>
                                                       Fiscal Year Ended     
                                              Dec. 28,      Dec. 30,      Dec. 31,
                                               1996          1995          1994
<S>                                          <C>           <C>           <C>          
Revenue:
  Product                                    $ 414,418     $ 395,941     $ 341,504
  Service                                      180,944       144,404       109,319
    Total revenue                              595,362       540,345       450,823

Costs and expenses:
  Cost of products sold                        197,702       188,232       164,991
  Cost of service revenue                      139,983       107,721        77,238
  Research and development                      53,733        40,923        35,047
  Selling, general and administrative          191,069       154,950       134,070
    Total costs and expenses                   582,487       491,826       411,346         

Operating income                                12,875        48,519        39,477
Interest income                                  3,007         5,340         3,515
Interest expense                                (3,187)       (4,207)       (4,687)
Other income (expense), net                     (2,019)       (2,325)          495           

Income before provision 
  for income taxes                              10,676        47,327        38,800
Provision for income taxes                       2,905        12,254         5,666            
     
Net income                                  $    7,771    $   35,073    $   33,134

Net income per share                        $     0.23    $     1.04    $     1.03

Weighted average number of common
  and common equivalent shares outstanding      34,254        33,665        32,028
                                   

The accompanying notes to consolidated financial statements are an integral 
part of these statements.


                  SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                           CONSOLIDATED BALANCE SHEETS 
                      (In thousands, except per share amounts) 
<CAPTION>

                                                    Dec. 28, 1996   Dec. 30, 1995     
<S>                                                 <C>             <C>
ASSETS                                                                   
Current assets:                                                          
  Cash and cash equivalents                            $  37,979     $  61,939
  Restricted deposits                                     44,655        39,642
  Receivables, net                                       209,752       178,322
  Inventories                                             74,491        60,853
  Prepaid royalties and other                             30,577        13,464
    Total current assets                                 397,454       354,220
Property and equipment, net                              133,838        98,165
Capitalized software costs, net                           59,567        45,381
Other assets, net                                         21,150         6,157
    Total assets                                       $ 612,009     $ 503,923

LIABILITIES AND SHAREHOLDERS' EQUITY 
Current liabilities: 
  Notes payable                                        $  59,925     $  41,146
  Accounts payable and other                              88,119        60,095
  Accrued payroll                                         24,853        11,723
  Unearned revenue                                        30,787        21,466
  Income taxes payable                                     3,017         4,981
  Current obligations under capital leases and debt        7,325            60
    Total current liabilities                            214,026       139,471
Other accrued expenses                                     6,671         2,158
Long-term obligations under capital leases and debt       16,503         9,106
    Total liabilities                                    237,200       150,735
 
Commitments and contingencies (Notes 6 and 12)
                                                                        
Shareholders' equity: 
  Common stock, $.01 par value, 100,000 shares
    authorized, 34,188 and 33,221 shares outstanding         342           332  
  Paid-in capital                                        313,159       302,186 
  Retained earnings                                       60,715        52,945  
  Foreign currency translation adjustment                    593        (2,275)         
    Total shareholders' equity                           374,809       353,188     
    Total liabilities and shareholders' equity         $ 612,009     $ 503,923     
                                                                         
                                   
The accompanying notes to consolidated financial statements are an integral 
part of these statements.


                              SEQUENT COMPUTER SYSTEMS, INC.  AND SUBSIDIARIES 
                              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
                                               (In thousands) 

<CAPTION>

                                                                           Retained       Foreign
                                                                           earnings       currency
                                         Common Stock        Paid-in     (accumulated    translation
                                       Shares     Amount     capital        deficit)     adjustment      Total     
<S>                                    <C>        <C>        <C>         <C>             <C>            <C>
Balance, January 1, 1994               30,245      $302      $265,910      $(15,262)      $(7,462)      $243,488

Common shares issued                    1,115        12        12,235             -             -         12,247
Net income                                  -         -             -        33,134             -         33,134
Foreign currency translation 
     adjustment                             -         -             -             -         2,326          2,326
Balance, December 31, 1994             31,360       314       278,145        17,872        (5,136)       291,195

Common shares issued                    1,798        18        18,298             -             -         18,316
Tax benefit of option exercises             -         -         4,743             -             -          4,743
Conversion of debentures                   63         -         1,000             -             -          1,000
Net income                                  -         -             -        35,073             -         35,073
Foreign currency translation
     adjustment                             -         -             -             -         2,861          2,861
Balance, December 30, 1995             33,221       332       302,186        52,945        (2,275)       353,188

Common shares issued                      967        10         9,622             -             -          9,632
Tax benefit of option exercises             -         -           175             -             -            175
Warrants issued                             -         -         1,176             -             -          1,176
Net income                                  -         -             -         7,771             -          7,771
Foreign currency translation
     adjustment                             -         -             -             -         2,868          2,868
Rounding                                    -         -             -            (1)            -             (1)
Balance, December 28, 1996             34,188      $342      $313,159      $ 60,715        $  593       $374,809

                                   
The accompanying notes to consolidated financial statements are an integral 
part of these statements.


                                SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES 
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS 
                                                 (In thousands) 
<CAPTION>
                                        
                                                                      Fiscal Year Ended          
                                                      Dec. 28, 1996     Dec. 30, 1995     Dec. 31, 1994        
<S>                                                   <C>               <C>               <C>                     
Cash flow from operating activities: 
  Net income                                            $   7,771         $ 35,073          $ 33,134
  Reconciliation of net income  
    to net cash and cash equivalents provided
    by operating activities- 
      Depreciation and amortization                        65,534           52,094            44,600     
  Changes in assets and liabilities- 
      Receivables, net                                    (31,430)         (44,751)          (18,010)     
      Inventories                                         (13,638)         (12,155)           (2,833)     
      Prepaid royalties and other                         (17,113)            (652)             (403)     
      Accounts payable and other                           28,024           13,351           (17,072)
      Accrued payroll                                      13,130              (71)              891      
      Unearned revenue                                      9,321           11,750             2,593     
      Income taxes payable                                 (1,964)           1,131             2,835     
      Other accrued expenses                                4,513               58               314     
  Net cash provided by      
      operating activities                                 64,148           55,828            46,049     
                                                                                              
Cash flow from investing activities: 
  Restricted deposits                                      (5,013)          19,795           (27,158)     
  Investments                                                  --               --             5,000
  Purchases of property and equipment, net                (80,617)         (38,923)          (40,256)
  Capitalized software costs                              (34,170)         (23,444)          (19,116)
  Foreign currency translation adjustment                   2,868            2,861             2,326
  Other assets, net                                       (15,600)          (4,262)              399     
    Net cash used for investing activities               (132,532)         (43,973)          (78,805)     
                                                                                              
Cash flow from financing activities: 
  Notes payable, net                                       18,779          (18,291)           27,158
  Proceeds (payments) under capital lease obligations      14,662             (719)           (3,293)
  Long-term debt payments, net                                 --             (256)              (51)
  Stock issuance proceeds, net                             10,983           23,059            12,247     
    Net cash provided by financing activities              44,424            3,793            36,061      

Net increase (decrease) in cash and cash equivalents      (23,960)          15,648             3,305
Cash and cash equivalents at beginning 
  of period                                                61,939           46,291            42,986
Cash and cash equivalents at end of period              $  37,979         $ 61,939          $ 46,291     

</TABLE>
                                   
The accompanying notes to consolidated financial statements are an integral 
part of these statements.
                                                                
                SEQUENT COMPUTER SYSTEMS, INC. AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

     Sequent Computer Systems, Inc. and subsidiaries ("Sequent" or the 
"Company") was incorporated in January 1983.  Sequent is a provider of 
scalable data center ready open systems solutions for large organizations 
spanning diverse industries.  Sequent designs, manufactures and markets high-
performance symmetric multiprocessing (SMP) and Cache Coherent Non-Uniform 
Memory Access (CC-NUMA) computer systems and operating environment software.  
The Company's systems are widely used for large-scale on-line transaction 
processing (OLTP), applications in decision support systems (DSS) and data 
warehouses, for custom applications built upon relational database management 
systems (RDBMS), and as the central server in client-server architectures.  
Sequent's project-oriented offerings include a complete portfolio of customer, 
professional and education services to solve complex Information Technology 
(IT) problems. The Company has an established set of partnerships with other 
software, hardware and services providers to deliver complete solutions to its 
customers.

     Principles of Consolidation.   The Company's fiscal year is based on a 
52-53 week year ending the Saturday closest to December 31.  The consolidated 
financial statements of the Company include accounts of Sequent Computer 
Systems, Inc. and its wholly-owned subsidiaries.  All significant intercompany 
accounts and profits have been eliminated.  

     The financial statements and transactions of the Company's foreign 
subsidiaries are maintained in their functional currencies and translated into 
U.S. dollars for purposes of consolidation.  Translation adjustments are 
accumulated as a separate component of shareholders' equity.  Gains and losses 
resulting from transactions denominated in a currency other than an entity's 
functional currency are included in other income (expense) in the consolidated 
statements of operations.  Net losses aggregating $0.3 million and $0.8 
million, for 1995 and 1996 respectively, were realized from such transactions.  
During 1994 the Company realized a net pretax gain of $1.1 million as a result 
of positive impact of changes in exchange rates, primarily in the United 
Kingdom. 

     Revenue Recognition and Receivables.  Revenue from product sales is 
generally recognized upon shipment; however, depending upon contract terms, 
revenue recognition may be deferred until customer acceptance or clarification 
of funding.  Revenue is recognized as earned on the straight-line basis over 
the term of customer service/maintenance contracts, and on either the 
percentage-of-completion or milestone achievement basis for professional 
service contracts.  

     Receivables are shown net of allowance for doubtful accounts of $2.8 
million at both December 28, 1996 and December 30, 1995.  

     The Company has an agreement with a group of banks to sell, without 
recourse, undivided ownership interests in a revolving pool consisting of 
substantially all of the Company's domestic accounts receivable for a maximum 
of $20 million.  The agreement expires May 30, 1997.  At December 28, 1996 and 
December 30, 1995, accounts receivable in the accompanying consolidated 
balance sheets is net of $20 million and $14 million, respectively, received 
by the Company under this agreement.

     The Company had no single customer that represented greater than 10% of 
total revenue in 1996, 1995 and 1994.

     Inventories.  Inventories are stated at the lower of cost or market.  
Costs are determined using the first-in, first-out (FIFO) method and include 
material, labor and manufacturing overhead.  

     Prepaid Licenses and Royalties.  The Company has entered into agreements 
with various vendors which provide for prepayment of future licenses and 
royalties based on sales of certain software.  Prepaid licenses and royalties 
were $28.4 million at December 28, 1996 and $3.6 million at December 30, 1995, 
and are stated at the lower of cost or net realizable value.  Approximately 
$16.1 million and $1.2 million were included in prepaid royalties and other 
current assets at December 28, 1996 and December 30, 1995, respectively.  Such 
prepaid amounts are realized by receipt of reverse royalties from the vendors 
based upon software sales by the vendor, and/or by charging cost of products 
sold for certain software sales by the Company.

     Property and Equipment.  Property and equipment are stated at cost and 
depreciated over their estimated useful lives, ranging from three to five 
years, on the straight-line method.  Leasehold improvements and equipment held 
under capital leases are amortized on the straight-line basis over the shorter 
of the asset life or lease term.  Maintenance and repairs are expensed as 
incurred.  

     Research and Development.  Software development costs for certain 
projects are capitalized from the time technological feasibility is 
established to the time the resulting software product is first shipped.  
Capitalized software costs are stated at the lower of cost or net realizable 
value and are shown net of accumulated amortization of $38.4 million at 
December 28, 1996 and $58.3 million at December 30, 1995.  Amortization, 
generally based on a three-year straight-line basis, was $20 million in 1996, 
$16.6 million in 1995 and $12.8 million in 1994.  All other research and 
development costs are expensed as incurred.  

     Income Taxes.  The Company's general practice is to reinvest the earnings 
of its foreign subsidiaries in those operations, unless it would be 
advantageous to the Company to repatriate the foreign subsidiaries' retained 
earnings.

     Per Share Information.  Primary earnings per share is computed based on 
the weighted average number of common and dilutive common equivalent shares 
outstanding.  Outstanding stock options, net of assumed buy-back, are common 
stock equivalents.  The computation of fully dilutive earnings per share also 
assumes conversion of the remaining 7.5% Convertible Subordinated Debentures 
issued April 1992 when it would be dilutive.  A fully diluted earnings per 
share amount is not shown as the effect of the debentures would be 
antidilutive.  

     Consolidated Statement of Cash Flows.  The Company considers short-term 
investments which are highly liquid, readily convertible into cash and having 
original maturities of less than three months to be cash equivalents for 
purposes of the statement of cash flows.

     Total cash expenditures for income taxes were $5.9 million, $5.3 million 
and $2.3 million during 1996, 1995 and 1994, respectively.  Interest paid does 
not differ materially from interest expense.  

     Non-cash investing and financing activities include the following: 1996 - 
300,000 stock warrants, valued at $1.2 million using the Black-Scholes pricing 
model, were issued in exchange for other non-current assets; 1995 - $1 million 
of Convertible Debentures were converted into 63,000 shares of common stock.  

     Management Estimates.  The preparation of financial statements in 
conformity with generally accepted accounting principles requires management 
to make estimates and assumptions that affect the reported amounts of assets 
and liabilities and disclosure of contingent assets and liabilities at the 
date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period.  Actual results could differ from these 
estimates.

     Reclassifications.  Certain prior year amounts have been reclassified to 
conform to fiscal 1996 presentation.  These changes had no impact on 
previously reported results of operations or shareholders' equity.

     New Accounting Pronouncements.  In October 1995, the FASB issued 
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (SFAS 123).  SFAS 123 allows companies to choose whether 
to account for stock-based compensation on a fair value method or to continue 
to account for stock-based compensation under the current intrinsic value 
method as prescribed by APB Opinion No. 25,  "Accounting for Stock Issued to 
Employees."  The Company adopted SFAS 123 during 1996, and has elected to 
continue to follow the provisions of APB Opinion No. 25.  (Note 8) 


2.   INVENTORIES 
          (in thousands)
                                     December 28,     December 30,     
                                        1996             1995          
     
               Raw materials          $ 14,205          $ 9,385     
               Work-in-progress          2,166            1,736     
               Finished goods           58,120           49,732     

                                      $ 74,491         $ 60,853     

     Finished goods inventory includes evaluation systems aggregating $30.8 
million and $15.7 million as of December 28, 1996 and December 30, 1995, 
respectively.  Such systems are located at potential customer sites for 
demonstration.
                                                           
3.   PROPERTY AND EQUIPMENT 
          (in thousands)
                                         December 28,     December 30,     
                                             1996             1995          
  
        Land                             $   5,037        $   5,037     
        Operational equipment              174,662          134,897     
        Furniture and office equipment      89,951           67,010     
        Leasehold improvements              22,584           15,974     
                                           292,234          222,918

        Less accumulated depreciation 
          and amortization                (158,396)        (124,753)     
                                         $ 133,838        $  98,165       
                                                                        
     Depreciation and amortization charged to expense totaled $44.9 million in 
1996, $35.0 million in 1995 and $31.8 million in 1994.  

4.   NOTES PAYABLE 

     The Company has an unsecured line of credit agreement with a group of 
banks which provides short-term borrowings up to $70 million (increased in the 
third quarter of 1996 from $50 million).  The line of credit agreement 
contains financial covenants, including covenants relating to net worth, ratio 
of liabilities to net worth and limitations on net operating losses, and 
prohibits the Company from paying dividends without the group of banks' 
consent.  The line of credit agreement extends through May 30, 1997.  At 
December 28, 1996, $12.2 million was outstanding under this line of credit 
agreement.  At December 30, 1995, there were no borrowings outstanding under 
the line of credit.  The interest rate on this borrowing at December 28, 1996 
was 8.25%

     The Company has a short-term borrowing agreement with a foreign bank as a 
hedge to cover certain foreign currency exposures.  Borrowings under the 
agreement are denominated in various foreign currencies.  Proceeds from the 
borrowings are converted into U.S. dollars and placed in a term deposit 
account with the foreign bank.  The deposits, which are classified as 
restricted deposits in the accompanying consolidated balance sheets, are 
pledged to the foreign bank so long as borrowings under the agreement are 
outstanding.  During July 1996, the Company re-negotiated the agreement and 
extended it through July 1997.  The foreign bank, without cause, can terminate 
the agreement at any time.  At December 28, 1996, maximum borrowings allowed 
under the agreement were $57.2 million.  Amounts outstanding were $44.7 
million and $39.6 million at December 28, 1996 and December 30, 1995, 
respectively.  The maximum borrowing limit is denominated in specified foreign 
currencies and fluctuates with the change in foreign exchange rates.  The 
average interest rate on these borrowings at December 28, 1996 was 4.8%.  

     In addition to the above borrowing agreements, the Company has entered 
into certain other miscellaneous borrowing arrangements with a foreign bank.  
Amounts outstanding were $0.9 million and $1.5 million at December 28, 1996 
and December 30, 1995, respectively.  The interest rate on these borrowings 
was 1.5% at December 28, 1996.

     During 1996 a U.S. subsidiary of the Company entered into a financing 
arrangement with third parties for $2.2 million, of which $1 million is with a 
related party.  The financing consists of short-term convertible notes with an 
interest rate of 10% due February 23, 1997.  At the option of the holders, the 
notes may be converted into capital stock of the subsidiary.  

5.       OBLIGATIONS UNDER CAPITAL LEASES AND LONG-TERM DEBT 

     In April 1992, the Company issued $20 million of 7.5% Convertible 
Subordinated Debentures ("Convertible Debentures" or "Debentures") due March 
31, 2000.  In conjunction with the Company's equity offering in 1993, $9.9 
million of the Debentures were converted into 626,000 shares of common stock 
and are no longer classified as long-term debt.  The Convertible Debentures 
are convertible into the Company's common stock at the option of the holders 
at an initial conversion price of $15.81 per share.  Under this provision, in 
August 1995, an additional $1.0 million of the debentures were converted into 
63,000 shares of common stock, further reducing long-term debt.  Beginning on 
June 30, 1997, the Company is required to make quarterly principal payments of 
$1.7 million through 1998 to retire the outstanding Debentures.  The balance 
outstanding on the Debentures was $9.1 million at both December 28, 1996 and 
December 30, 1995.  At December 28, 1996, $5.0 million is classified as 
current obligations.  The Convertible Debentures are callable at the option of 
the Company after five years.  The Debentures contain certain financial 
covenants, including restrictions on additional debt, minimum net worth levels 
and a prohibition on the payment of dividends.

     Sequent leases certain equipment under five-year capital leases.  These 
lease terms require maintenance of certain financial ratios and generally 
include a fair market value purchase option at the end of the lease.  The cost 
of equipment under capital leases was $0.3 million and $0.4 million at the end 
of 1996 and 1995, respectively.  Accumulated amortization was $0.1 million and 
$0.3 million, respectively.  These leased assets are pledged as security for 
capital lease obligations.

     In addition to the above capital leases, the Company entered into a 
sales-leaseback transaction in September 1996 under which certain operating 
equipment with a net book value of $12.2 million was sold for $15.3 million 
and then leased back under a capital lease.  The related lease terms stipulate 
monthly payments ranging from $274,000 to $341,000 over the five-year lease 
term beginning September 1996 at an annual interest rate of 7.4%.  The 
resulting gain of $3.1 million has been recorded under "Other Accrued 
Expenses" and is being amortized in proportion to the related equipment 
depreciation over three years.  The terms of the lease include an asset buy-
back provision at the end of the lease for the then fair market value of the 
assets at the Company's option.  Future minimum lease payments are as follows:

                1997                             $  3,285
                1998                                3,285
                1999                                3,960
                2000                                4,095
                2001                                2,730
     Total minimum lease payments                  17,355

     Less amount representing interest             (2,849)

     Present value of minimum lease payments     $ 14,506



6.   OPERATING LEASE COMMITMENTS 

     Sequent is committed under operating leases for office space and 
manufacturing facilities.  Future minimum lease payments are as follows: 

     (in thousands)    

                      1997                   $19,052     
                      1998                    16,468     
                      1999                    13,051     
                      2000                    10,558     
                      2001 and thereafter     22,390
                                             $81,519     

     Rent expense for operating leases was $17.4 million, $14.9 million and 
$15.1 million in 1996, 1995 and 1994, respectively.


7.   INCOME TAXES 

     Pre-tax income from continuing operations for the last three fiscal years 
was taxed under the following jurisdictions: 

     (in thousands)

                                     Fiscal     Fiscal     Fiscal     
                                      1996       1995       1994     

     Domestic                      $  5,593    $ 29,556   $ 27,332 
     Foreign                          5,083      17,771     11,468     
       Total                       $ 10,676    $ 47,327   $ 38,800

     The provision (benefit) for income taxes was as follows:

                                     Fiscal     Fiscal     Fiscal
                                      1996       1995       1994

     Current:
       Federal                     $   789    $  5,890    $ 1,420
       Foreign                       3,109       5,435      3,769
       State                           164         355         96
                                     4,062      11,680      5,285

     Deferred:
       Federal                        (900)         --         --
       Foreign                        (257)        574        381
                                    (1,157)        574        381

     Total provision               $ 2,905    $ 12,254    $ 5,666          
                                                                         
     
     
     

Deferred tax liabilities (assets) are comprised of the following 
components: 
                                        
     (in thousands)     
                                                Dec. 28,     Dec. 30,          
                                                  1996         1995          

     Research and development                  $ 22,998     $ 17,534     
     Other                                        1,567        2,929          
     Gross deferred tax liabilities              24,565       20,463

     Net operating loss carryforwards:
       Domestic                                 (24,985)     (21,677)
       Foreign                                   (7,965)      (8,733)
     Credit carryforwards                       (12,741)     (10,720)
     Expenses not currently deductible           (7,971)      (7,586)
     Depreciation                                (1,596)        (798)
     Revenue currently taxable                   (1,399)        (945)
     Inventory basis differences                   (556)      (1,337)
     Restructuring costs                            (71)        (188)
     Gross deferred tax assets                  (57,284)     (51,984)
     Deferred tax asset valuation allowance      31,583       31,542
     Net deferred tax liability (asset)        $ (1,136)    $     21          
     
          
The provision for income taxes differs from the amount of income taxes 
determined by applying the U.S.  statutory federal tax rate to pre-tax income 
due to the following: 
                                 
                                            Fiscal     Fiscal     Fiscal     
                                             1996       1995       1994     
                                                                           
     Statutory federal tax rate             35.0%      35.0%      35.0%      
     State taxes, net of federal benefit     4.2        4.2        4.2      
     Tax benefit from Foreign 
       Sales Corporation                    (6.8)      (1.6)      (3.9)
     Tax provision on foreign earnings      (0.9)      (2.1)      (0.1)
     Realized benefit from net               
       operating losses                     (1.3)      (9.6)     (20.9)
     Other, net                             (3.0)        --        0.3
                                            27.2%      25.9%      14.6%


     The deferred tax asset valuation allowance in fiscal years 1994-1996 is 
attributed to U.S. federal, state, and foreign deferred tax assets.  
Management believes sufficient uncertainty exists with regard to the 
realizability of such assets that a valuation allowance of $31.6 million has 
been provided at December 28, 1996.  When and if these reserved deferred tax 
assets are ultimately realized, $15.5 million will reduce the Company's 
federal and state tax provision and $16.1 million will be credited to paid-in 
capital (related to stock option deductions).

     In accordance with FAS 109, the valuation allowance is allocated pro-rata 
to federal, state, and foreign current and non-current deferred tax assets.  
The net deferred tax asset at December 28, 1996 and the net deferred tax 
liability at December 30, 1995 reflect foreign liabilities offset by U.S. 
assets.

     The Company has accumulated unused research and development credits of 
$5.0 million for income tax purposes.  These credits expire from 1998-2011.  
The Company also has Alternative Minimum Tax Credits (AMT) which may be 
carried forward indefinitely and certain state tax credits which expire from 
1997-2001.

     The Company may realize tax benefits as a result of the exercise of 
certain employee stock options.  For financial reporting purposes, any 
reduction in income tax obligations as a result of these tax benefits is 
credited to paid-in capital.  During 1996 and 1995, $175,000 and $4.7 million 
of benefits were credited to paid-in capital, respectively, with a related 
reduction in current taxes payable.  No benefits were recognized in 1994.

     An income tax provision has not been recorded for U.S. or additional 
foreign taxes on undistributed earnings of foreign subsidiaries as the 
undistributed earnings have been and will continue to be reinvested in 
operations outside the United States.

8.   SHAREHOLDERS' EQUITY 

     Common Stock.  In 1995, $1.0 million of convertible debentures were 
converted into 63,000 shares of common stock.  (Note 5)

     Stock Compensation Plans.  At December 28, 1996, the Company had the 
following stock-based compensation plans:

Stock Option Plans

At December 28, 1996 the Company had options outstanding to employees and non-
employees under the following Stock Option Plans:  1984 Employee Stock Option 
Plan and 1984 Nonstatutory Stock Option Plan (the "1984 Plans"), the 1987 
Employee Stock Option Plan and 1987 Nonstatutory Stock Option Plan (the "1987 
Plans"), the 1989 Stock Incentive Plan (the "1989 Plan"), the 1995 Stock 
Incentive Plan and the 1996 Stock Option Plan.  Options granted after May 18, 
1995 were made under the 1995 Stock Incentive Plan and the 1996 Stock Option 
Plan.  As of December 28, 1996, the Company has reserved a total of 12,365,000 
shares of common stock for issuance under these Plans, of which 6,909,440 
shares were outstanding at December 28, 1996.  Employee and non-employee 
options vest over varying time periods, generally ranging from one to four 
years, as long as, in the case of employees, the optionee remains employed by 
Sequent.  Option prices generally have been at 85% or greater of the fair 
market value of the common stock on the date of grant. Options generally 
expire ten years from the date of the grant.

Employee Stock Purchase Plan

In September 1987, Sequent established an Employee Stock Purchase Plan.  Under 
the plan, Sequent is authorized to grant rights to purchase up to 5,550,000 
shares of common stock in a series of eighteen-month offerings.  At December 
28, 1996, there were 1,674,002 shares available for future purchase.  
Substantially all employees are eligible to receive rights under the plan.  
The purchase price is the lesser of 85% of the fair market value of the common 
stock on the date of commencement of the offering or on the date of purchase.  
During 1996, 1995 and 1994, Sequent issued 682,864, 576,423 and 467,479 shares 
under the plan, respectively.

Statement of Financial Accounting Standards No. 123

During 1995, the Financial Accounting Standards Board issued SFAS 123, 
"Accounting for Stock Based Compensation," which defines a fair value based 
method of accounting for an employee stock option or similar equity instrument 
and encourages all entities to adopt that method of accounting for all of 
their employee stock compensation plans.  However, it also allows an entity to 
continue to measure compensation cost related to stock options issued to 
employees under these plans using the method of accounting prescribed by the 
Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock 
Issued to Employees."  Entities electing to remain with the accounting in APB 
25 must make pro forma disclosures of net income and earnings per share, as if 
the fair value based method of accounting defined in this Statement has been 
applied.

The Company has elected to continue to account for stock-based compensation 
using the intrinsic value method prescribed in APB 25 and related 
Interpretations.  Accordingly, no compensation cost has been recognized in the 
consolidated statements of operations for its stock-based compensation plans 
other than for performance-based awards. 

Had compensation cost for the other stock-based compensation plans been 
determined based on the fair value at the grant dates for awards under these 
plans consistent with the method of FASB Statement 123, "Accounting for Stock-
Based Compensation", the Company's net income and earnings per share would 
have been reduced to the pro forma amounts indicated below:

   (in thousands)                         Fiscal       Fiscal
                                           1996         1995

   Net income (loss)     As reported      $7,771      $35,073
                         Pro forma          (709)      30,959                  


   Primary earnings (loss)               
   per share             As reported       $0.23       $1.04
                         Pro forma         (0.02)       0.91

The fair value of each option grant is estimated on the date of grant using 
the Black-Scholes option-pricing model with the following weighted average 
assumptions used for grants in 1995 and 1996:  

                                          Fiscal      Fiscal
                                           1996        1995

   Risk-free interest rate                 6.05%       6.33%
   Expected dividend yield                   --          --
   Expected lives                        3 years     4 years
   Expected volatility                       50%         55%

The fair value of the employees' purchase rights was estimated using the 
Black-Scholes model with the following assumptions for 1995 and 1996:

                                          Fiscal      Fiscal
                                           1996        1995

   Risk-free interest rate                 5.58%       5.23% 
   Expected dividend yield                   --          --
   Expected lives                         1 year      1 year
   Expected volatility                       50%         55%

The weighted-average per share fair value of those purchase rights granted in 
1995 and 1996 was $15.51 and $13.15, respectively.



A summary of the status of the Company's stock option plans as of December 28, 
1996 and December 30, 1995, and changes during the years ending on those dates 
is presented below:

<TABLE>
                                   (in thousands, except per share)
<CAPTION>
                                                  Fiscal                           Fiscal
                                                   1996                             1995     
                                                     Weighted-Average                    Weighted-Average
                                          Shares        per share           Shares          per share
                                       under option   Exercise Price     under option     Exercise Price
<S>                                   <C>             <C>                <C>             <C>
Outstanding at beginning 
  of year                                 5,068          $ 14.26             4,432          $ 11.63
Granted:
  Price = Fair Value                      3,353            12.60             1,716            18.21       
  Price < Fair Value                      1,196            11.12               612            14.90
Exercised                                  (196)            8.53            (1,056)            9.68
Forfeited                                (2,512)           16.55              (636)           14.78
Outstanding at
  end of year                             6,909            12.27             5,068            14.26
Options exercisable
  at year-end                             1,446                              1,276
     
Weighted-average per share fair value of
  options granted during the year        $ 3.69                             $ 8.46


The following table summarizes information about stock options outstanding at 
December 28, 1996:

<CAPTION>
                                 OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
                                                                                                  Weighted-
                       Number      Weighted-Average   Weighted-Average           Number            Average
   Range of         Outstanding        Remaining          per share           Exercisable          per share     
Exercise Prices     at 12/28/96    Contractual Life     Exercise Price        at 12/28/96        Exercise Price

<S>                <C>            <C>                  <C>                    <C>                <C>
    $0 - $10.50      1,573,560        7.0  years          $  9.55               553,826            $  8.61
$10.63 - $11.88      1,700,109        8.1                   11.38               264,476              11.59
$11.90 - $13.88      1,435,227        7.7                   12.86               272,295              13.28
$13.92 - $14.00      1,502,886        8.0                   14.00                  --                  --
$14.03 - $22.31        697,658        7.3                   15.62               355,511              15.77     

 $0.00 - $22.31      6,909,440        7.7                   12.27             1,446,108              11.79


</TABLE>

9.     GEOGRAPHIC SEGMENT INFORMATION 

     Information about the Company's foreign operations and export sales is 
provided in the table below.  Foreign revenue is that which is produced by 
identifiable assets located in foreign countries while export revenue is that 
which is generated by identifiable assets located in the United States.  
                                        
 (in thousands)

                              Fiscal          Fiscal           Fiscal     
                               1996            1995             1994     
Revenue:                                                                       
  United States           $  270,571       $  244,029      $   233,246
  Foreign:                                                                 
    Europe                   262,396          242,133          177,320
    Other                     41,443           32,784           24,624
  Export:                                                             
    Other                     20,952           21,399           15,633        
                         $   595,362       $  540,345      $   450,823       
Operating income (loss):                                                
  United States          $     5,825       $   27,184      $    27,773
  Foreign:                                                            
    Europe                     7,424           18,290            9,444        
    Other                       (374)           3,045            2,260       
                        $     12,875       $   48,519      $    39,477       
Identifiable assets:                                               
  United States         $    448,527       $  367,196      $   321,857      
  Foreign:                                                                   
    Europe                   148,727          123,614          105,232         
    Other                     14,755           13,113            8,888      
                        $    612,009       $  503,923      $   435,977        
                                                                          
     Intercompany sales between geographic areas, primarily from the United 
States to Europe, were $155.7 million during 1996, $131.0 million during 1995 
and $111.1 million during 1994.  

10.     FOREIGN CURRENCY EXPOSURE 

     A substantial portion of the Company's business is conducted overseas 
through its foreign subsidiaries, primarily in Europe.  This exposes the 
Company to risks associated with foreign currency rate fluctuations which can 
impact the Company's revenue and net income.  To mitigate this risk the 
Company enters into foreign currency transactions with foreign and domestic 
banks on a continuing basis in amounts and timing consistent with the 
underlying currency exposure so that gains and losses on these transactions 
offset gains and losses on the underlying exposure.  The Company does not 
engage in any speculative trading activity.  See related discussion in Note 4.  

     In addition to the arrangements described in Note 4, at December 28, 
1996, the Company also has a forward exchange contract denominated in Japanese 
yen with a contract amount of approximately $2.8 million.  This forward 
contract is used to hedge certain intercompany payables.  The Company has also 
purchased off-setting currency options and calls used to hedge certain 
anticipated but not yet firmly committed transactions expected to be 
recognized within one year.  Gains and losses on such contracts have not been 
significant to date.

11.     FAIR VALUE OF FINANCIAL INSTRUMENTS 

     Statement of Financial Accounting Standards No. 107, "Disclosures About 
Fair Value of Financial Instruments," requires disclosure of the fair value of 
certain financial instruments.

     Cash and cash equivalents, restricted deposits, receivables, notes 
payable, accounts payable and other and current obligations under capital 
leases and debt are reflected in the consolidated financial statements at fair 
value because of the short-term maturity of these instruments.

     The fair value of long-term obligations under capital leases was 
estimated by discounting the future cash flows using market interest rates and 
does not differ significantly from the amount reflected in the consolidated 
financial statements.

     Due to the private nature of the Company's convertible debentures and the 
subjectivity of assessing the impact of the Company's future common stock 
price, the fair value of long-term debt is judged to be materially the same as 
that reflected in the financial statements.

     Fair value estimates are made at a specific point in time, based on 
relevant market information about the financial instrument.  These estimates 
are subjective in nature and involve uncertainties and matters of significant 
judgment and therefore cannot be determined with precision.  Changes in 
assumptions could significantly affect the estimates.

12.     COMMITMENTS AND CONTINGENCIES

     Lawsuits arise during the normal course of business.  In the opinion of 
management, none of the pending lawsuits will result in a significant impact 
on the consolidated results of operations or financial position.


REPORT OF INDEPENDENT ACCOUNTANTS 


To the Board of Directors and Shareholders of 
Sequent Computer Systems, Inc.  


     In our opinion, the accompanying consolidated balance sheets and the 
related consolidated statements of operations, of shareholders' equity and of 
cash flows present fairly, in all material respects, the financial position of 
Sequent Computer Systems, Inc. and its subsidiaries at December 28, 1996 and 
December 30, 1995, and the results of their operations and their cash flows 
for each of the three years in the period ended December 28, 1996, in 
conformity with generally accepted accounting principles.  These financial 
statements are the responsibility of the Company's management; our 
responsibility is to express an opinion on these financial statements based on 
our audits.  We conducted our audits of these statements in accordance with 
generally accepted auditing standards which require that we plan and perform 
the audit to obtain reasonable assurance about whether the financial 
statements are free of material misstatement.  An audit includes examining, on 
a test basis, evidence supporting the amounts and disclosures in the financial 
statements, assessing the accounting principles used and significant estimates 
made by management, and evaluating the overall financial statement 
presentation.  We believe that our audits provide a reasonable basis for the 
opinion expressed above.  


PRICE WATERHOUSE LLP

Portland, Oregon 
January 23, 1997



QUARTERLY FINANCIAL DATA (unaudited) 
(In thousands, except per share amounts) 

                                        
                      Total           Gross            Net         Earnings    
                     Revenue          Profit          Income      Per Share    

Fiscal 1996
  First quarter     $ 120,745      $   51,481      $     598      $   0.02
  Second quarter      142,587          61,203          3,306          0.10
  Third quarter       148,785          66,132          1,355          0.04
  Fourth quarter      183,245          78,861          2,512          0.07
    Year           $  595,362      $  257,677      $   7,771      $   0.23

Fiscal 1995
  First quarter    $  116,099      $   52,689      $   5,953      $   0.18
  Second quarter      139,207          65,082         11,010          0.33
  Third quarter       133,215          59,565          7,441          0.22
  Fourth quarter      151,824          67,056         10,668          0.31
    Year           $  540,345      $  244,392      $  35,073*     $   1.04


     *The sum of quarterly net income does not equal annual net income due to 
rounding.



                       MARKET INFORMATION (unaudited) 

     Sequent's Common Stock has been traded on the NASDAQ National Market 
System since April 1987 under the symbol SQNT.  The following table sets 
forth, for the fiscal quarters indicated, the high and low sales prices for 
the common stock as reported on the NASDAQ National Market System.  
                                        
                                 High              Low     

1996:
  First quarter              $   14.88          $  10.31     
  Second quarter             $   14.88          $  11.88
  Third quarter              $   13.88          $  10.88
  Fourth quarter             $   18.25          $  12.50

1995:
  First quarter              $   20.63          $  15.56
  Second quarter             $   18.63          $  14.44
  Third quarter              $   25.25          $  17.88
  Fourth quarter             $   19.50          $  14.38


     At December 28,1996, there were approximately 1,134 shareholders of 
record of the Company's common stock and 34.2 million shares outstanding.  The 
Company has never paid cash dividends on its common stock.  The Company 
intends to retain earnings for use in its business and, therefore, does not 
anticipate paying cash dividends in the foreseeable future.  In addition, the 
Company's bank line of credit agreement and the agreements relating to the 
Company's Convertible Debentures prohibit payment of dividends without the 
lenders' consent.



                                                                   EXHIBIT 21

                 SEQUENT COMPUTER SYSTEMS, INC. - SUBSIDIARIES 



ENTERPRISE FINANCE COMPANY (Oregon)

SEQUENT EXPORT, INC. (Barbados)

DP APPLICATIONS, INC. (Oregon)

CANADA:

     SEQUENT COMPUTER SYSTEMS (CANADA) LIMITED

EUROPE:

     SEQUENT COMPUTER SYSTEMS LIMITED (United Kingdom)

     SEQUENT COMPUTER SYSTEMS A.B. (Sweden)

     SEQUENT COMPUTER SYSTEMS GmbH (Germany)

     SEQUENT COMPUTER SYSTEMS, S.A. (France)

     SEQUENT COMPUTER SYSTEMS, B.V. (Netherlands)

     SEQUENT COMPUTER SYSTEMS, spol. s r.o. (Czechoslovakia)

     OPEN TOOL INTERNATIONAL, B.V. (Netherlands)

     SEQUENT COMPUTER SYSTEMS S. r. I. (Italy)

     SEQUENT COMPUTER SYSTEMS CJSC (Russia)

JAPAN:

     SEQUENT COMPUTERS JAPAN CO., LTD

ASIA:

     SEQUENT COMPUTER SYSTEMS (N.Z.) LIMITED (New Zealand)

     SEQUENT COMPUTER SYSTEMS AUSTRALIA PTY. LIMITED

     SEQUENT COMPUTER SYSTEMS ASIA LIMITED (Hong Kong)

     SEQUENT COMPUTER SYSTEMS (SINGAPORE) PTE. LIMITED

                                                              EXHIBIT 23

Consent of Independent Accountants




We hereby consent to the incorporation by reference in the Registration 
Statements on Form S-8 (Nos. 33-16428, 33-16463, 33-33338, 33-36836, 33-39315, 
33-39657, 33-40941, 33-40942, 33-63972, 33-63974, 33-59147 and 33-59611) of 
Sequent Computer Systems, Inc. of our report dated January 23, 1997 appearing 
in the Annual Report to Shareholders which is incorporated in this Annual 
Report on Form 10-K.  We also consent to the incorporation by reference of our 
report on the Financial Statement Schedules.





PRICE WATERHOUSE LLP


Portland, Oregon
March 21, 1997