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<SEC-DOCUMENT>0000087050-01-500005.txt : 20010613
<SEC-HEADER>0000087050-01-500005.hdr.sgml : 20010613
ACCESSION NUMBER:		0000087050-01-500005
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20010430
FILED AS OF DATE:		20010612

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SBE INC
		CENTRAL INDEX KEY:			0000087050
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				941517641
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	000-08419
		FILM NUMBER:		1659292

	BUSINESS ADDRESS:	
		STREET 1:		4550 NORRIS CANYON ROAD
		CITY:			SAN RAMON
		STATE:			CA
		ZIP:			94583
		BUSINESS PHONE:		5103552000

	MAIL ADDRESS:	
		STREET 1:		4550 NORRIS CANYON RD
		CITY:			SAN RAMON
		STATE:			CA
		ZIP:			94583
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>sbe_q201.txt
<TEXT>

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

                                    FORM 10-Q

                                   (Mark one)

            [X]     Quarterly report pursuant to section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  FOR THE QUARTERLY PERIOD ENDED APRIL 30, 2001

        [  ]     Transition report pursuant to section 13 or 15(d) of the
                       Securities and Exchange Act of 1934

               For the transition period from _______ to ________


                          Commission file number 0-8419
                                                 ------

                                    SBE, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                     94-1517641
     -----------------------------------           --------------------
     (State or other jurisdiction of                (I.R.S.  Employer
     incorporation  or  organization)              Identification  No.)


              4550 Norris Canyon Road, San Ramon, California 94583
              -----------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (925) 355-2000
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate  by check mark whether 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 Registrant was required
to  file such reports), and (2) has been subject to such filing requirements for
the  past  90  days.

                             Yes       X     No
                                      ---            ---

The number of shares of Registrant's Common Stock outstanding as of May 31, 2001
was  3,515,222.


                                        1
<PAGE>

                                    SBE, INC.

                        INDEX TO APRIL 30, 2001 FORM 10-Q



PART  I     FINANCIAL INFORMATION

ITEM  1     Financial Statements

Condensed Consolidated Balance Sheets as of
   April 30, 2001 and October 31, 2000                                         3

Condensed Consolidated Statements of Operations for the
   three and six months ended April 30, 2001 and 2000                          4

Condensed Consolidated Statements of Cash Flows for the
   six months ended April 30, 2001 and 2000                                    5

Notes to Condensed Consolidated Financial Statements                           6

ITEM  2     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                8

ITEM  3     Quantitative and Qualitative Disclosures about
            Market Risk                                                       13


PART  II     OTHER INFORMATION

ITEM  4     Submission of Matters to a Vote of Security Holders               13

ITEM  6     Exhibits and Reports on Form 8-K                                  14


SIGNATURES                                                                    15

EXHIBITS                                                                      16






                                        2
<PAGE>
PART  I.       FINANCIAL  INFORMATION
ITEM  1.     FINANCIAL  STATEMENTS

<TABLE>
<CAPTION>

                                    SBE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                  April 30,    October 31,
                                                    2001          2000
                                                 -----------  -------------
<S>                                              <C>          <C>
                                                 (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                      $    6,869   $      5,311
  Trade accounts receivable, net                      1,713          4,296
  Inventories, net                                    5,090          4,918
  Other                                                 339            427
                                                 -----------  -------------
    Total current assets                             14,011         14,952

Property, plant and equipment, net                    1,913          2,143
Capitalized software costs, net                         194            293
Other                                                    71             39
                                                 -----------  -------------
    Total assets                                 $   16,189   $     17,427
                                                 ===========  =============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable                         $      684   $      1,094
  Accrued payroll and employee benefits                 275          1,304
  Accrued product warranties                            144            145
  Accrued rent                                          383             --
  Other accrued expenses                                155            767
                                                 -----------  -------------
    Total current liabilities                         1,641          3,310

Refundable Deposit                                    4,870             --
Deferred rent and other                                 256            288
                                                 -----------  -------------

    Total liabilities                                 6,767          3,598
                                                 -----------  -------------

Stockholders' equity:
  Common stock                                       13,850         13,855
  Deferred stock compensation                           (41)          (164)
  Treasury stock                                       (409)          (409)
  Note receivable from stockholder                     (744)          (744)
  Retained earnings (accumulated deficit)            (3,234)         1,291
                                                 -----------  -------------
    Total stockholders' equity                        9,422         13,829
                                                 -----------  -------------
    Total liabilities and stockholders' equity   $   16,189   $     17,427
                                                 ===========  =============
</TABLE>
            See notes to condensed consolidated financial statements.


                                        3
<PAGE>

<TABLE>
<CAPTION>

                                    SBE,  INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (Unaudited)

                                    Three months ended   Six months ended
                                          April 30,          April 30,
                                        2001     2000     2001     2000
                                      --------  ------  --------  -------
<S>                                   <C>       <C>     <C>       <C>
Net sales                             $ 1,813   $8,944  $ 5,231   $15,913

Cost of sales                           1,523    3,110    2,902     5,333
                                      --------  ------  --------  -------

  Gross profit                            290    5,834    2,329    10,580

Product research and development        1,585    1,214    3,219     2,717

Sales and marketing                       768    1,245    1,572     2,450

General and administrative                815    1,372    1,799     2,442

Restructuring costs                       384       --      384        --
                                      --------  ------  --------  -------

  Total operating expenses              3,552    3,831    6,974     7,609
                                      --------  ------  --------  -------

  Operating income (loss)              (3,262)   2,003   (4,645)    2,971

Interest and other income, net             50       34      120        67
                                      --------  ------  --------  -------

  Income (loss) before income taxes    (3,212)   2,037   (4,525)    3,038

Provision for income taxes                ---       53      ---        94
                                      --------  ------  --------  -------

  Net income (loss)                   $(3,212)  $1,984  $(4,525)  $ 2,944
                                      ========  ======  ========  =======

Basic earnings (loss) per share       $ (0.95)  $ 0.64  $ (1.35)  $  0.95
                                      ========  ======  ========  =======

Diluted earnings (loss) per share     $ (0.95)  $ 0.53  $ (1.35)  $  0.83
                                      ========  ======  ========  =======

Basic - Shares used
  in per share computations             3,368    3,116    3,349     3,099
                                      ========  ======  ========  =======

Diluted - Shares used
  in per share computations             3,368    3,717    3,349     3,547
                                      ========  ======  ========  =======
</TABLE>
            See notes to condensed consolidated financial statements.


                                        4
<PAGE>

<TABLE>
<CAPTION>


                                    SBE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                                              Six months ended
                                                                  April 30,
                                                                 ----------
                                                               2001      2000
                                                             --------  --------
<S>                                                          <C>       <C>
Cash flows from operating activities:
  Net income (loss)                                          $(4,525)  $ 2,944
  Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
    Amortization of deferred stock compensation                   14        --
    Depreciation and amortization:
      Property and equipment                                     436       418
      Software                                                   109       119
    Changes in operating assets and liabilities:
      (Increase) decrease in trade accounts receivable         2,583    (3,496)
      Increase in inventories                                   (172)   (1,748)
      Increase (decrease) in other assets                         56       (71)
      Increase (decrease) in trade accounts payable             (410)    1,093
      Increase (decrease) in other current liabilities        (1,259)    1,179
      Increase (decrease) in non current liabilities           4,838       (31)
                                                             --------  --------
        Net cash provided by operating activities              1,670       407
                                                             --------  --------

Cash flows from investing activities:
  Purchases of property and equipment                           (206)     (569)
  Capitalized software costs                                     (10)      (96)
                                                             --------  --------
        Net cash used in investing activities                   (216)     (665)
                                                             --------  --------

Cash flows from financing activities:
  Purchase of treasury stock                                      --       (51)
  Proceeds from stock plans                                      104       302
                                                             --------  --------
        Net cash provided by financing activities                104       251
                                                             --------  --------

      Net increase (decrease) in cash and cash equivalents     1,558        (7)

Cash and cash equivalents at beginning of period               5,311     3,385
                                                             --------  --------
Cash and cash equivalents at end of period                   $ 6,869   $ 3,378
                                                             ========  ========
</TABLE>
            See notes to condensed consolidated financial statements.

                                        5
<PAGE>

                                    SBE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.     INTERIM  PERIOD  REPORTING:

     These  condensed  consolidated  financial  statements  of  SBE,  Inc.  (the
"Company")  are  unaudited  and  include  all  adjustments, consisting of normal
recurring  adjustments,  that are, in the opinion of management, necessary for a
fair  presentation  of the financial position and results of operations and cash
flows  for  the interim periods. The condensed consolidated financial statements
of  the  Company  include the financial position and results of operation of LAN
Media  Corporation,  which the Company acquired on July 14, 2000. The merger was
accounted  for  as a pooling of interests, and accordingly, financial statements
presented  for all periods have been restated to reflect combined operations and
financial position. The results of operations for the six months ended April 30,
2001 are not necessarily indicative of expected results for the full 2001 fiscal
year.

     Certain  information  and  footnote  disclosures  normally  contained  in
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  condensed  or  omitted.  These  condensed  consolidated
financial statements should be read in conjunction with the financial statements
and  notes  contained  in  the Company's Annual Report on Form 10-K for the year
ended  October  31,  2000.

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. Significant
estimates  and  judgments made by management of the Company include matters such
as  collectibility  of  accounts  receivable,  realizability  of inventories and
recoverability  of  capitalized  software  and  deferred  tax  assets.

2.     INVENTORIES:

Inventories  comprise  the  following  (in  thousands):

                                            April 30,      October 31,
                                              2001            2000
                                             ------          ------
             Finished goods             $     2,476     $     2,144
             Parts and materials              2,614           2,774
                                             ------          ------
                                        $     5,090     $     4,918
                                             ======          ======

                                        6
<PAGE>

3.     REFUNDABLE  DEPOSIT

     A  refundable  deposit  associated  with a multi-year supply agreement with
Compaq  Computer  Corporation  of  $4.9 million was received in April 2001. This
deposit  is refundable as the Company delivers certain quantities of products to
Compaq  over  the next four years. The entire deposit has been classified as non
current  as  the  first refund is not expected to be made within the next twelve
months.

4.     NET  EARNINGS  (LOSS)  PER  SHARE:

     Basic earnings per common share for the six months ended April 30, 2001 and
2000  were computed by dividing net income (loss) by the weighted average number
of shares of common stock outstanding. Diluted earnings per common share for the
six  months  ended  April  30,  2000 were computed by dividing net income by the
weighted  average  number of shares of common stock and common stock equivalents
outstanding.

     The  following  table  sets  forth the computation of basic and diluted net
income  (loss)  per  share  for  the periods indicated (in thousands, except per
share  data):

<TABLE>
<CAPTION>


                                   Three months ended   Six months ended
                                         April 30,          April 30,

                                        2001     2000     2001     2000
                                      --------  ------  --------  ------
<S>                                   <C>       <C>     <C>       <C>
Basic:
Numerator
- ---------
Net income (loss)                     $(3,212)  $1,984  $(4,525)  $2,944
Denominator
- -----------
Weighted average shares                 3,368    3,116    3,349    3,099
                                      --------  ------  --------  ------
Basic net income (loss) per share        (.95)     .64    (1.35)     .95
                                      --------  ------  --------  ------

Diluted:
Numerator
- ---------
Net income (loss)                      (3,212)   1,984   (4,525)   2,944
Denominator
- -----------
Weighted average shares                 3,368    3,116    3,349    3,547
Shares issuable under stock options       ---      601      ---      448
                                      --------  ------  --------  ------
Diluted shares                          3,368    3,717    3,349    3,547
Diluted net income (loss) per share      (.95)     .53    (1.35)     .83
                                      --------  ------  --------  ------
</TABLE>

                                        7
<PAGE>


     Diluted  net loss per share for the three and six month periods ended April
30,  2001 does not include the effect of 55,654 and 80,486 shares, respectively,
of  common  stock  issuable under stock options as such common stock equivalents
have  an  antidilutive  effect.

5.     RESTRUCTURING  COSTS:

     During  the  second  fiscal quarter of 2001, the Company recorded a pre-tax
restructuring  charge of $384,000 in connection with the Company's consolidation
and  subleasing  of  facilities.  The  charge  represents  the  estimated  costs
associated  with  the  unoccupied  space,  net  of  estimated sublease revenues.

     The  Company expects future cash expenditures related to this restructuring
activity  to  be  approximately $384,000, of which $310,000 is anticipated to be
paid  within  the  next  twelve  months.  No  cash payments were made during the
quarter  ended  April  30,  2001  in  connection  with  this  matter.

6.     CONCENTRATION  OF  RISK:

     In  the three and six months ending April 30, fiscal 2001 and 2000, most of
the  Company's  sales  were  attributable  to  sales  of wireless communications
products  and  were  derived  from  a  limited number of OEM customers. Sales to
Compaq Computer Corporation accounted for 49 percent and 73 percent of net sales
during  the second quarter of fiscal 2001 and 2000, respectively, and 40 percent
and 75 percent of the Company's net sales in the first six months of fiscal 2001
and 2000, respectively. The only other customer with sales of 10 percent or more
was Lucent Technologies, with sales of 10 percent and four percent for the first
six  months of fiscal 2001 and 2000, respectively. Also, Compaq accounted for 46
percent and 82 percent of the Company's accounts receivable as of April 30, 2001
and  April 30, 2000, respectively. The Company expects that sales to Compaq will
continue  to  constitute a substantial portion of the Company's net sales in the
remainder  of  fiscal  2001.  A  significant reduction in orders from any of the
Company's  OEM  customers,  particularly  Compaq,  could have a material adverse
effect  on  the  Company's  business, operating results and financial condition.

ITEM  2.       MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  following  Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements that involve risks
and  uncertainties.  Such  forward-looking  statements  may be deemed to include
information  that is not historical, including without limitation, the Company's
expectations  regarding sales to Compaq Computer in fiscal 2001, the belief that
the  market  for  client  server networking products is growing, the adequacy of
anticipated  sources  of  cash,  planned  capital  expenditures,  the  effect of
interest  rate  increases  and  trends  or  expectations regarding the Company's
operations.  Words  such  as "believes," "anticipates," "expects," "intends" and
similar expressions are intended to identify forward-looking statements, but are
not  the  exclusive  means of identifying such statements. Readers are cautioned
that the forward-looking statements reflect management's analysis only as of the
date  hereof,  and the Company assumes no obligation to update these statements.
Actual  events or results may differ materially from the results discussed in or
implied  by  the  forward-looking  statements.  Factors  that might cause such a
difference  include,  but  are  not  limited  to,  those risks and uncertainties
discussed  below  under  "Factors  Affecting Operating Results" and elsewhere in
this  Quarterly  Report on Form 10-Q, as well as other risks set forth under the
caption  "Risk  Factors"  in  the  Company's  Annual Report on Form 10-K for the
fiscal  year  ended October 31, 2000. The following discussion should be read in
conjunction with the Financial Statements and the Notes thereto included in Item
1  of  this Quarterly Report on Form 10-Q and in the Company's Form 10-K for the
fiscal  year  ended  October  31,  2000.

                                        8
<PAGE>

     SBE,  Inc.  designs,  markets,  sells  and  supports high-speed intelligent
communications  controller  products  for  use  in  telecommunications  systems
worldwide.  Our products enable both traditional and emerging telecommunications
service  providers  to  deliver  advanced communications equipment and services,
which we believe help these providers compete more effectively in today's highly
competitive  telecommunications  service  market.  Our  products  include  WAN
interface adapters and high performance communications controllers that are used
principally  in  workstations, media gateways, routers, internet access devices,
home  location  registers  and  data  messaging  applications.

     Our business is characterized by a concentration of sales to a small number
of  OEM  customers  and consequently the timing of significant orders from major
customers  and their product cycles causes fluctuation in our operating results.
Sales  to  Compaq  Computer  Corporation,  our  largest customer, represented 67
percent  of  our  net  sales  in  fiscal  2000.  If  any of our major customers,
especially  Compaq,  reduces  orders  for  our products, we could lose revenues,
whereby  our  business,  operating results and financial condition would suffer.
Sales  to  Compaq  accounted  for  40 percent of our net sales in the six months
ended  April  30,  2001  and 75 percent for the first six months of fiscal 2000.
Orders  by  our  OEM  customers  are  affected  by  factors  such as new product
introductions,  product  life  cycles, inventory levels, manufacturing strategy,
contract  awards,  competitive  conditions  and  general  economic  conditions.

     We  are  attempting  to  diversify  our  sales with the introduction of new
products  that  are  targeted  at  large  growing  markets  within  the
telecommunications  industry.  Our  Highwire  products  are  focused  on  the
telecommunications  applications market. We believe the growth in this market is
driven  by  the  convergence  of  traditional  telephony  applications  with the
Internet.  We  cannot  assure you that we will be able to succeed in penetrating
this  market  and  diversifying  our  sales.

RESULTS  OF  OPERATIONS

     The  following table sets forth, as a percentage of net sales, consolidated
statements  of operations data for the three and six months ended April 30, 2001
and  2000.  These  operating  results  are  not  necessarily  indicative  of our
operating  results  for  any  future  period.
                                        9
<PAGE>

<TABLE>
<CAPTION>


                                   THREE MONTHS ENDED   SIX MONTHS ENDED
                                  -------------------- ------------------
                                         APRIL 30,          APRIL 30,
                                        ----------         ----------

                                       2001   2000        2001   2000
                                      ------  -----      -----  -----
<S>                                   <C>     <C>        <C>    <C>
Net sales                               100%   100%       100%   100%
Cost of sales                            84     35         55     34
                                      ------  -----      -----  -----
  Gross profit                           16     65         45     66
                                      ------  -----      -----  -----
Product research and development         87     14         62     17
Sales and marketing                      42     14         30     17
General and administrative               45     15         34     15
Restructuring costs                      21     --          7     --
                                      ------  -----      -----  -----
  Total operating expenses              196     43        133     48
                                      ------  -----      -----  -----
  Operating income (loss)              (180)    22        (89)    19
Interest and other income, net            3      1          2      0
                                      ------  -----      -----  -----
  Income (loss) before income taxes    (177)    23        (87)    19
Provision for income taxes               --      1         --      0
                                      ------  -----      -----  -----
  Net income (loss)                   (177)%    22%       (87)%   19%
                                      ======  =====       ===== =====
</TABLE>




NET  SALES

     Net  sales  for  the second quarter of fiscal 2001 were $1.8 million, an 80
percent  decrease  from  the  second  quarter  of fiscal 2000. For the first six
months  of  fiscal  2001  net  sales  were  $5.2 million, which represented a 67
percent  decrease  from  the  same  period  in  fiscal  2000.  This decrease was
primarily  attributable  to  lower sales to Compaq of $5.7 million in the second
quarter of fiscal 2001 and $9.9 million for the first six months of fiscal 2001,
respectively,  compared  to  fiscal 2000. This was in addition to a $1.4 million
decrease  in sales of all other product lines combined for the second quarter of
fiscal  2001,  and  an $800,000 decrease in sales of all other product lines for
the  first  six  months  of  fiscal  2001,  compared  to fiscal 2000. Market and
economic  uncertainty  as  well as product design delays at several of our large
customers  also  contributed  to the decrease as product development cycles were
pushed  back to later quarters of the year. Sales to Compaq, primarily of VMEBus
products,  represented 49 percent of sales for the second quarter and 40 percent
of  sales  for  the  first  six  months  of  fiscal  2001, while sales to Lucent
Technologies  represented six percent of net sales during the second quarter and
10  percent  of sales for the first six months of fiscal 2001. No other customer
accounted  for  over  10  percent of sales in the three or six month periods. We
expect  to  continue  to  experience  fluctuation  in  product  sales  as  large
customers'  needs  change.

GROSS  PROFIT

     Gross  profit as a percentage of sales in the second quarter of fiscal 2001
was  16  percent,  as compared to 65 percent during the second quarter of fiscal
2000. For the first six months of fiscal 2001 the gross profit percentage was 45
percent,  as  compared  to 66 percent during the same period of fiscal 2000. The
decrease  from  fiscal  2000 to fiscal 2001 was primarily attributable to higher
material  costs  and  a  less  favorable  product mix in the fiscal 2001 period.

                                       10
<PAGE>

PRODUCT  RESEARCH  AND  DEVELOPMENT

     Product  research  and development expenses were $1.6 million in the second
quarter  of  fiscal  2001,  an  increase  of 31 percent from $1.2 million in the
second quarter of fiscal 2000, but virtually unchanged from the first quarter of
fiscal  2001.  For the first six months of fiscal 2001, research and development
expenses  were  $3.2  million,  an 18 percent increase from $2.7 million for the
first  six  months  of  fiscal  2000.  The  increase in research and development
spending  from  the fiscal 2000 period to the fiscal 2001 period was a result of
accelerated  spending  for  development  of  our  HighWire  and  other  new
telecommunications  products.  We  expect  research  and development spending to
remain equal to or slightly below current levels, as additional new products are
developed  and as we continue to expand our product lines to meet the demands of
the  telecommunications  marketplace.

SALES  AND  MARKETING

     Sales  and  marketing  expenses  for the second quarter of fiscal 2001 were
$768,000,  a  decrease  of 38 percent from $1.2 million in the second quarter of
fiscal 2000. The sales and marketing expenses for the first six months of fiscal
2001  were $1.6 million, a 36 percent decrease from $2.5 million in fiscal 2000.
The  decrease  for  fiscal  2001  was  primarily  due to lower marketing program
spending  for  products already introduced during previous quarters, but not yet
fully  available  in  volume.  Expenditures  were  closely monitored in light of
current market conditions, and less than expected revenue year to date. Overall,
we  expect  sales  and marketing expenses will increase slightly from the fiscal
2000  level during fiscal 2001, as additional new products are introduced and as
marketing and sales programs are expanded and/or introduced to give even greater
exposure  to  our  newer  products.

GENERAL  AND  ADMINISTRATIVE

     General and administrative expenses were $815,000 for the second quarter of
fiscal 2001, a decrease of 41 percent from $1.4 million in the second quarter of
fiscal  2000. For the first six months of fiscal 2001 general and administrative
expenses  were  $1.4 million, a decrease of 42 percent from $2.4 million for the
first  six months of fiscal 2000. This decrease was due to carefully maintaining
or reducing spending levels in response to lower income levels during the second
quarter  of  fiscal  2001.  In  future  periods,  we  expect  that  general  and
administrative expenses may continue to decrease from current expenditure levels
as  overhead  levels  are  reduced.

RESTRUCTURING  COSTS

     Restructuring  costs  of  $384,000  were  recorded during the second fiscal
quarter  of  2001  related  to  the  Company's  consolidation  and subleasing of
facilities.  The charge represented the estimated costs of facilities leases net
of  estimated  sublease  revenues.

INTEREST  AND  OTHER  INCOME,  NET

     Net interest and other income increased to $50,000 in the second quarter of
fiscal  2001  from  $34,000 in the same period in fiscal 2000, an increase of 47
percent.  Also,  for  the first six months of fiscal 2001 net interest and other
income was $120,000, an increase of 79 percent from $67,000 in fiscal 2000. This
increase  was  due  to  higher  average  cash  balances  and  decreased  debt.

INCOME  TAXES

     We  did  not  record  any benefit for taxes in the second quarter of fiscal
2001  or  during  the  first six months of fiscal 2001 due to the uncertainty in
realizing  the  benefit  derived  from  our  net operating losses and unused tax
credits  in  future  periods.  Therefore  the  tax  benefits  related to the net
operating  losses  and  tax  credits  were fully reserved against. We recorded a
provision  for  taxes  in  the second quarter of fiscal 2000 of $53,000. For the
first  six  months  of  fiscal  2000, we recorded a provision of $94,000. In the
event  of future taxable income, our effective income tax rate in future periods
could  be  lower  than  the  statutory  rate  as  operating  loss and tax credit
carryforwards  are  recognized.
                                       11
<PAGE>

NET  INCOME  (LOSS)

     As  a result of the factors discussed above, we recorded a net loss of $3.2
million  in the second quarter of fiscal 2001, as compared to net income of $2.0
million in the second quarter of fiscal 2000. For the first six months of fiscal
2001,  the  loss  was $4.5 million, compared to a net income of $2.9 million for
the  first  six  months  of  fiscal  2000.

LIQUIDITY  AND  CAPITAL  RESOURCES

     At  April  30,  2001,  we had cash and cash equivalents of $6.9 million, as
compared  to $5.3 million at October 31, 2000. In the first six months of fiscal
2001,  $1.7 million of cash was provided through operating activities, primarily
as a result of a $2.6 million decrease in accounts receivable and a $4.8 million
increase  in  non  current  liabilities,  partially offset by a $4.5 million net
loss,  a $172,000 increase in inventories, a $410,000 decrease in trade accounts
payable  and  a $1.3 million decrease in other current liabilities. The accounts
receivable  decrease  was primarily a result of decreased sales. The increase in
non  current  liabilities  was  the result of a $4.9 million deposit from Compaq
which  was  part  of a four-year end-of-life supply agreement that was initiated
during  the  second  quarter  of fiscal 2001. Inventory increased as a result of
purchases  of  certain end-of-life components to be used in future production of
VME and LMC adapter products, offset by obsolete inventory that was written off.
We  believe  that  we  have  acquired  sufficient components to meet backlog and
forecasted  customer  demand,  to  meet near term requirements, and are actively
working  with  the  applicable  customers to help them transition to new product
platforms.  The  decrease  in trade accounts payable is the result of controlled
spending  during  the  current  period of decreased sales. The decrease in other
current  liabilities  was  a result of the payment of accrued sales commissions,
bonuses,  and company profit sharing earned in the previous fiscal year. Working
capital  at  April  30,  2001 was $12.4 million, as compared to $11.6 million at
October  31,  2000.

     In  the  first six months of fiscal 2001, the Company purchased $206,000 of
fixed  assets,  consisting  primarily  of  computer  and  engineering equipment.
Software costs amounting to $10,000 were capitalized during the first six months
of  2001.  We  expect capital expenditures will remain at current levels for the
remainder  of  fiscal  2001.

     We  received  $104,000 in the first six months of fiscal 2001 from payments
related  to  employee  stock  option  exercises  and purchases made by employees
pursuant  to  our  employee  stock  purchase  plan.

     Based  on  the  current operating plan, we anticipate that our current cash
balances  and  anticipated cash flows or usage from operations will allow for us
to meet our working capital needs over the next 12 months. However, in the event
additional  financing  is  required,  we  may  not be able to raise new funds on
acceptable  terms,  or  at  all.

                                       12
<PAGE>

ITEM  3.       QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     Our  cash and cash equivalents are subject to interest rate risk. We invest
primarily  on a short-term basis. Our financial instrument holdings at April 30,
2001  were analyzed to determine their sensitivity to interest rate changes. The
fair  values  of these instruments were determined by net present values. In our
sensitivity  analysis,  the  same  change  in  interest  rate  was  used for all
maturities and all other factors were held constant. If interest rates increased
by  10  percent,  the  expected  effect  on  net income related to our financial
instruments  would  be  immaterial.



PART  II.     OTHER  INFORMATION

ITEM  4.               SUBMISSION  OF  MATTERS  TO  A  VOTE  OF SECURITY HOLDERS

(a)  The  annual  meeting  of  stockholders  of the Company was held on Tuesday,
     March  20,  2001, at the Company's corporate offices located at 4550 Norris
     Canyon  Road,  San  Ramon,  California.

     The  stockholders  approved  the  following  four  items:

     (i)  The  election of two directors to hold office until the 2004 Annual
     Meeting of  Stockholders:
                                                       For     Against
                                                   ---------   -------
               Raimon  L.  Conlisk                 2,734,472   311,381
               Randall  L-W  Caudill               2,736,257   309,596

     (ii)  The  Company's  1996  Stock  Option  Plan, as amended to increase the
     number  of  of  shares  reserved  for  issuance  under such plan by 150,000
     shares.  (For--  722,904;  Against--506,921;  Abstain--3,183;
     Non-votes--1,812,845)


     (iii)  Approved the Company's Non-Employee Directors' Plan (the "Directors'
     Plan"),  as amended to change the amount of the initial discretionary grant
     for  non-employee  directors,  the  term  and  vesting  schedule of options
     granted  under  the  Directors'  Plan  and  other  provisions as more fully
     described  in  the  proxy  statement  for  the  2001  Annual  Meeting  of
     Stockholders.  (For--807,240;  Against--422,520;  Abstain--3,248;
     Non-votes--1,812,845)


     (iv) The ratification of the selection of PricewaterhouseCoopers LLP as the
     Company's independent auditors for the fiscal year ending October 31, 2001.
     (For--3,041,287;  Against--3,728;  Abstain--838)


                                       13
<PAGE>


ITEM  6.          EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     List  of  Exhibits:

     10.1* Amendment No. S/M018-4 dated April 3, 2001, to the Purchase Agreement
           dated May 6, 1991, between SBE, Inc. and Compaq Computer Corporation.

     11.1     Statements of Computation of Net Income (Loss) per Share.


(b)     Reports  on  Form  8-K:

     No  report  on  Form  8-K was filed by the Company during the quarter ended
April  30,  2001.

*  Certain  portions  have  been  deleted  pursuant  to a confidential treatment
request.

                                       14
<PAGE>

                                   SIGNATURES



Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized,  on  June  12,  2001.


                                   SBE,  INC.
                                   ----------
                                   Registrant




                                   /s/Timothy J. Repp
                                   ------------------------------------------
                                   Timothy  J.  Repp
                                   Chief Financial Officer, Vice President of
                                   Finance and Secretary (Principal Financial
                                   and Accounting Officer)


                                       15
<PAGE>
                                  EXHIBIT INDEX

Exhibit          Description                                             Page
- -------          -----------                                             ----

10.1*            Amendment No. S/M018-4 dated April 3, 2001 to the         17
                 Purchase Agreement Dated May 6, 1991, between
                 SBE, Inc. and Compaq Computer Corporation.

11.1             Statements of Computation of Net Income (Loss)            32
                 per share.


*  Certain  portions  have  been  deleted  pursuant  to a confidential treatment
request.

                                       16
<PAGE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>doc2.txt
<TEXT>



EXHIBIT  10.1
                                        ***  Text  Omitted  and Filed Seperately
                                              Confidential  Treatment  Requested
                                             Under  17  C.F.R.  200.80(b)(4),
                                                  200.83  and  240.24b-2



                AMENDMENT NO. S/M018-4 TO THE PURCHASE AGREEMENT
                  BETWEEN SBE INC. AND COMPAQ DATED MAY 6, 1991
           AGREEMENT NO. S/M018-0 & PURCHASING AMENDMENT NO. S/M018-3


     THIS  AMENDMENT  No.  S/M018-4  to  the Purchase Agreement No. S/M018-0 and
Purchasing  Amendment  No. S/M018-3 is entered into as of this 3rd day of April,
2001  (the  "Effective  Date"), by and between SBE, INC., a Delaware corporation
with  its  principal place of business at 4550 Norris Canyon Road, San Ramon, CA
94583-1369  ("Seller"),  and COMPAQ COMPUTER CORPORATION, a Delaware corporation
with  its  principal  place of business at 901 Page Avenue, Fremont, California,
94538  ("Customer").

                                    RECITALS
     A.  Seller  manufactures  and  distributes  certain  hardware  components;
     B.  Customer  wants  to  buy  Seller's  hardware  components  from  Seller.
WHEREAS,  Buyer  and  Seller  have entered into the Corporate Purchase Agreement
effective  as  of May 6, 1991 ("Agreement") as amended by the Purchase Amendment
with  an  effective  date  of  May  6,  1996.

     NOW,  THEREFORE,  Seller  and  Customer  agree  as  follows:

                                    AGREEMENT
1.     DEFINITIONS

1.1.     "Confidential  Information"  means  any  confidential  or  proprietary
information  of  either  party,  including  without  limitation  any  designs,
schematics,  plans  or  any  other information relating to any research project,
work  in  process,  future  development, scientific, engineering, manufacturing,
marketing  or  business  plan, or financial or personnel matter relating to such
party,  its  present or future products, sales, suppliers, customers, employees,
investors  or  business, and identified as propriety or confidential, whether in
oral  form,  or  in  written,  graphic  or  electronic  form."

1.2.     "Intellectual  Property  Rights" means all current and future worldwide
patents  and  other  patent rights (such as continuations, continuations-in-part
and  reissues),  utility models, copyrights, mask work rights, trade secrets and
all  other  intellectual  property  rights,  including  without  limitation  all
applications  and  registrations  with  respect  thereto,  including trademarks,
service  marks,  trademarks,  trade names and other product, service and company
identifiers.

                                       17
<PAGE>

1.3.     "Products"  means the Seller-proprietary hardware products described on
Exhibit  A  attached  hereto.

1.4.     "Source  Control Documents" (SCD) The SCD is a non-disclosure statement
specifying the information provided will not be freely disclosed to unauthorized
end  users.  The  SCD  also  outlines  the  procedures  and process required for
handling  source  code  information.  The  SCD  contains  information considered
confidential;  examples  would be blue prints, operating software for controlled
products,  software  that  allows  the  automatic  generation  of  source codes,
software  that  performs  proof/validation.

2.     PURCHASE  OF  PRODUCTS.

2.1.  Purchase Orders. Customer's purchase orders for Products shall contain the
quantity  of each item to be purchased, the delivery destinations, the requested
delivery  dates,  any  special  shipping  or  delivery  instructions,  billing
instructions  and  any other special information required by this Agreement. All
purchase orders hereunder must be received by Seller prior to April 30, 2005 and
must  specify  a delivery date prior to July 31, 2005. All purchase orders shall
be  issued  at  least  sixty (60) days but no more than one hundred eighty (180)
days before the requested delivery date. Notwithstanding the preceding sentence,
by agreeing to pay a premium/expedite fee of [ *** ] of the original order price
(in  addition  to original order price) Customer may issue a purchase order less
than sixty (60) days before the requested delivery date. Seller will endeavor to
meet  such  requests  by  Customer  for  expedited  delivery  insofar  as  it is
practicable  and  consistent  with  Seller's  production schedules to do so, but
Seller  shall  have  the right to reject any request for expedited delivery. The
terms  and  conditions of this Agreement with respect to Product purchases shall
be  incorporated  into  and  made a part of each Customer purchase order. Seller
reserves  the right to reject any purchase order that is not consistent with the
terms  of  this  Agreement.  The  terms  and  conditions of this Agreement shall
supersede  any  terms set forth in any purchase order or other Customer document
delivered  in connection with Customer's purchases under this Agreement, and any
terms  and conditions appearing in any purchase order that are inconsistent with
or  in  addition  to  the  terms and conditions of this Agreement shall be of no
force  and  effect  and  are hereby rejected. Performance under a purchase order
shall not constitute acceptance of terms that are inconsistent or in addition to
the  terms  and  conditions  of  this  Agreement.

2.2.     Minimum  Product  Purchases.  During  the  Term,  Customer  agrees  to
Purchase  and  Seller agrees to supply up to 13,350 units of the Products at the
purchase  price per unit set forth in Exhibit A.  Such purchase shall consist of
up  to [ *** ] VCOM-33 controller boards (Part No. U40567-A01) and up to [ *** ]
VCOM-34 controller boards (Part Nos. U32887-002 and U25022-A04). Customer agrees
to  convert  all  orders  for  Products  outstanding as of the Effective Date to
purchase  orders  under  this  Agreement  no later than April 3, 2001.  All such
orders  not  converted  as  of  April  5,  2001  will  be  cancelled.

***  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE  SECURITIES  AND  EXCHANGE  COMMISSION.  CONFIDENTIAL  TREATMENT  HAS  BEEN
REQUESTED  WITH  RESPECT  TO  THE  OMITTED  PORTIONS.
                                       18
<PAGE>

2.3.      Minimum  Order,  Minimum  Delivery.  Seller shall not be obligated to
accept  any  order from Customer of fewer than [ *** ] units of each part number
listed on Exhibit A. Seller shall not be obligated to make any delivery of fewer
than  [  ***  ]  units  of  each  part  number  listed  on  Exhibit  A.

2.4.     Retention of Rights to Change Product Design. Either party reserves the
right  to  make  changes  and  modifications  in specification, construction, or
design of any Product or product component at any time and from time to time and
any  component  so  modified shall be accepted by both parties in fulfillment of
existing  orders.  Either  party will notify Customer in writing of any proposed
design  changes  to  the  Products,  which  affect  form, fit, function, safety,
reliability  or  electrical  or  mechanical  interfaces.  Such  notices  will be
delivered  at least ninety (90) days prior to such date change is expected to be
incorporated  into  the  Product.

2.5.     No  Cancellation. Customer may not cancel purchase orders once accepted
by  Seller,  except  for the ability to reschedule as referred to in Section 2.6

2.6.     Reschedule.  For  no  charge  or  fee, Customer may request rescheduled
delivery  for  Products  subject to an outstanding purchase order; provided that
(i)  the  date  of  such request is at least 60 days in advance of the requested
rescheduled  delivery  date  and (ii) the requested rescheduled delivery date is
less  than  180  days  from  the  original  order  date.  By  agreeing  to pay a
premium/expedite  fee  of  [  ***  ] of the original order price (in addition to
original order price) Customer may request that delivery for Products subject to
an  outstanding  purchase  order be rescheduled to a date less than [ *** ] days
from  the  date  of  such  request.  All  requests  for rescheduled delivery are
subject  to acceptance by Seller.  All rescheduled deliveries are subject to the
minimum  order  provision  of  Section  2.3.

3.     SHIPPING  TERMS.

3.1.      ORDER  FULFILLMENT.  Upon  receipt  of  a  purchase order, Seller will
notify  Customer  of  acceptance  or  rejection  of  such purchase order, and if
accepted, the proposed delivery date.  Seller will endeavor to fill all Customer
orders  for  Products  insofar  as  it  is  practicable  and consistent with its
production  schedules  to  do so, but in the event of its failure to fill all or
any  material  part  of  any accepted order within 10 days of committed delivery
Seller  shall  be  liable or responsible as follows.  For delivery later than 10
days  but  prior to 30 days from committed delivery date, Seller will reduce the
price  of  the  Products  by [ *** ]. For failure to deliver within [ *** ] days
from  committed  delivery  date  Customer  may give notice of termination as per
Section  10.4.  No  Customer  purchase  order  will  become fixed and binding on
Seller  unless  and  until  accepted  by  Seller.

3.2.     TITLE,  RISK OF LOSS AND SHIPPING COSTS. Delivery of all Products shall
be  made  ex  works  "per Chamber of Commerce INCOTERMS, 1990 addition" Seller's
facilities.  Customer  must take delivery of all Products no later than 180 days
from  the  order  date.  Customer  shall  be responsible for paying all freight;
handling,  shipping  and  insurance  charges and such charges will be separately
listed  in the applicable invoice and are not included in the list price for the
Products.   Title, risk of loss or damage to the Products shall pass to Customer
upon  shipment  from  Seller's  facility.

***  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE  SECURITIES  AND  EXCHANGE  COMMISSION.  CONFIDENTIAL  TREATMENT  HAS  BEEN
REQUESTED  WITH  RESPECT  TO  THE  OMITTED  PORTIONS.

                                       19
<PAGE>

3.3.     CARRIER.  Seller will select a carrier for delivery unless Customer has
designated  a  particular carrier acceptable to Seller. In no event shall Seller
have  any liability in connection with shipment, nor shall the carrier be deemed
to  be an agent of Seller.  Seller shall not be liable for damage or penalty for
delay  in  delivery or for failure to give notice of any delay. Customer will be
deemed  to  have  accepted  all  Products  upon  delivery.

4.     PURCHASE  PRICE  AND  PAYMENT.

4.1.     PURCHASE PRICE. Customer shall pay to Seller the purchase price for the
Products  as  set  forth on EXHIBIT A.  Customer acknowledges that separate fees
may  be  charged  under  a separate services agreement for related services, and
that  any  such  separate fees will be as stated in such agreement or an exhibit
thereto.  [  ***  ]

4.2.     PAYMENT SCHEDULE.  Customer shall pay  all  invoices  issued under this
Agreement  within  [  ***  ]  from  the  date of invoice. Seller may at any time
decline  to  make  any  shipments  or deliveries or perform any work except upon
receipt  of  payment  or  upon  terms and conditions or security satisfactory to
Seller.

4.3.     TAXES.  All  stated prices are exclusive of any taxes, fees, duties and
levies,  however  designated or imposed, and including without limitation, value
added  and  withholding  taxes  which  are levied or based upon the amounts paid
hereunder  (collectively,  "Taxes").  Any  Taxes  related  to Products purchased
pursuant  to  this Agreement shall be paid by Customer (excluding taxes based on
Seller's  net  income),  unless  Customer  presents  an  exemption  certificate
acceptable  to  Seller  and the applicable taxing authorities.  Applicable Taxes
shall  be  billed  as  a  separate  item  on the invoice to the extent possible.

4.4.     LATE  CHARGES.  Seller  reserves  the  right  to charge Customer a late
payment fee on any past due amounts at the rate of one and a half percent (1.5%)
per  month  or  the  maximum  amount  permitted  by  law,  whichever  is  less.

4.5.     DEPOSIT.  On  the Effective Date, Customer will pay to Seller a deposit
in  the  amount  of  four  million  eight  hundred  seventy  thousand  dollars
(US$4,870,000.00)  (the  "Deposit").  The  Deposit  will be refunded to Customer
according  to  the  following  schedule:

(a)     Seller will refund to Customer [ *** ] when a total of [ *** ] units of
the Products  have  been  shipped  to  Customer  under  this  Agreement;

***  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE  SECURITIES  AND  EXCHANGE  COMMISSION.  CONFIDENTIAL  TREATMENT  HAS  BEEN
REQUESTED  WITH  RESPECT  TO  THE  OMITTED  PORTIONS.
                                       20
<PAGE>

(b)     Seller  will refund to Customer [ *** ] when a total of [ *** ] units of
the  Products  have  been  shipped  to  Customer  under  this  Agreement;

(c)     Seller  will refund to Customer [ *** ] when a total of [ *** ] units of
the  Products  have  been  shipped  to  Customer  under  this  Agreement;

(d)     Seller  will refund to Customer [ *** ] when a total of [ *** ] units of
the  Products  have  been  shipped  to  Customer  under  this  Agreement;

(e)     Seller  will refund to Customer [ *** ] when a total of [ *** ] units of
the  Products  have  been  shipped  to  Customer  under  this  Agreement;

(f)     Seller will refund to Customer the remaining [ *** ] of the Deposit when
a  total  of  [  ***  ]  units  of  the  Products have been shipped to Customer;

If  Customer chooses to terminate the agreement pursuant to Section 10.2 or 10.3
prior to reaching any of the payback milestones listed in (a) through (f) above,
Seller  will  refund to Customer upon such termination [ *** ] per every unit of
the  Products purchased by Customer since the previous payment milestone reached
by  Customer.  Upon such termination, Customer will forfeit any remainder of the
Deposit  not  refunded  pursuant  to  the  terms  of  this  Section  4.5.

5.     LIMITED  WARRANTIES.

5.1.     LIMITED  WARRANTY.  The  Products  supplied to Customer by Seller under
this  Agreement are subject to the Seller's Product Limited Warranty attached as
EXHIBIT  B  hereto.  The  warranty  period  for  each  of  the Products supplied
hereunder will begin on the date such Products are shipped to Customer and shall
terminate  as  specified  in  the  Product  Limited  Warranty.

5.2.     WARRANTY DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTY IN THIS SECTION 5,
SELLER  MAKES  NO WARRANTIES, WHETHER EXPRESS, IMPLIED, OR STATUTORY, AND HEREBY
EXPRESSLY  DISCLAIMS ANY AND ALL SUCH WARRANTIES, INCLUDING, BUT NOT LIMITED TO,
ANY  WARRANTY  OF  MERCHANTABILITY,  FITNESS  FOR A PARTICULAR PURPOSE, TITLE OR
NONINFRINGEMENT,  WITH  RESPECT  TO THE PRODUCTS SUPPLIED TO CUSTOMER HEREUNDER.
Customer  acknowledges  that  it  has  not  relied  on  any  representations  or
warranties  regarding  the  Products,  other  than  those  in  this  Section  5.

5.3.     End-User  Warranties.  Customer  shall  indemnify,  defend  and  hold
harmless  Seller for and against any end-user warranty claim offered by Customer
that is outside the warranties of this Agreement, including, but not limited to,
valid  consumer  warranty claims arising outside the applicable warranty period.

***  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE  SECURITIES  AND  EXCHANGE  COMMISSION.  CONFIDENTIAL  TREATMENT  HAS  BEEN
REQUESTED  WITH  RESPECT  TO  THE  OMITTED  PORTIONS.
                                       21
<PAGE>

5.4.     Out of Warranty Repair Seller shall repair and or refurbish any Product
which  is  out  of  warranty  and which is not beyond practical reparability for
thirty  percent (30%) of the price stated in exhibit A. Seller warrants that any
Products  repaired  or  refurbished  by  Seller  will be in conformance with the
Product  Specifications  and  free from defects in materials and workmanship for
ninety  days  (90)  from  the  date  of  shipment.

6.     INDEMNITY

        Seller  shall  indemnify,  defend  and  hold  harmless  Buyer  and  its
affiliates and their respective directors, officers, shareholders, employees and
agents  (collectively, the "Buyer Indemnified Parties") from and against any and
all claims, demands, suits, actions, judgments, costs and liabilities (including
attorneys' fees) (each, an "Indemnified Loss") relating to or arising out of any
allegation  that Products furnished under this Agreement infringe or violate any
patent,  copyright,  trade  secret,  trade  name,  trade  dress, mask work, mask
rights,  trademark  or  any  other proprietary right and shall pay all costs and
damages  awarded;provided, the foregoing indemnity shall not apply to the extent
any  such  claim  is  attributable  solely to design specifications furnished by
Buyer  to  Seller.  Buyer shall notify Seller of such claim and permit Seller to
defend  and compromise such claim; provided, Buyer's failure to so notify Seller
shall not diminish Seller's indemnity obligations hereunder except to the extent
any  Buyer's delay in notifying Seller materially prejudices Seller's defense of
such  matter.  If  an  injunction  or  exclusion order preventing the use of the
Products  results  from  such  a claim (or, if Buyer reasonably believes such an
injunction  is likely) Seller shall, at its expense, and at Buyer's request, use
commercially  reasonable efforts to obtain for Buyer the right to continue using
the  Product.  In  the  event  that  Seller  cannot obtain such right for Buyer,
Seller  shall  be deemed to have breached its warranty set forth in the Warranty
Section  above  and  thereupon  Seller  shall  repurchase all such Products from
Buyer  at  the  purchase  price,  and Buyer shall be entitled to such additional
remedies  as  may  be  available  at  law  or  in  equity.

        Seller  shall  indemnify, defend and hold harmless the Buyer Indemnified
Parties  from and against any Indemnified Loss relating to or arising out of any
personal  injury  or  death  resulting  from  (i) the use of any Product or (ii)
Seller's acts or omissions; provided, the foregoing indemnity shall not apply to
the  extent  any  such  claim  is  attributable  solely to design specifications
furnished  by  Buyer  to  Seller.

                                       22
<PAGE>


7.     LIMITATION  OF  LIABILITY.

IN  NO  EVENT  SHALL  SELLER BE LIABLE TO CUSTOMER OR ANYONE CLAIMING THROUGH OR
UNDER  CUSTOMER,  FOR  ANY LOST PROFITS, LOST SAVINGS, PRODUCTS DOWNTIME OR LOST
DATA  OR  FOR  ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES OF ANY
KIND, INCLUDING, BUT NOT LIMITED TO, ARISING FROM OR RELATING TO THE PRODUCTS OR
THIS  AGREEMENT,  EVEN  IF  SELLER  HAS  BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.  NOTWITHSTANDING  THE  FAILURE  OF  ANY LIMITED REMEDY OF ITS ESSENTIAL
PURPOSE,  THE TOTAL CUMULATIVE LIABILITY OF SELLER TO CUSTOMER FOR ANY CLAIMS OR
CAUSES  OF  ACTION  ARISING  FROM OR RELATING TO THE PRODUCTS OR THIS AGREEMENT,
WHETHER  IN  CONTRACT,  IN  TORT  (INCLUDING NEGLIGENCE) OR OTHERWISE, SHALL NOT
EXCEED THE LESSER OF ONE THOUSAND DOLLARS ( $1,000) OR THE AGGREGATE AMOUNT PAID
TO  SELLER  DURING  THE  TWELVE  (12)  MONTHS  PRECEEDING  THE  CLAIM.  Customer
acknowledges  and  agrees  that  Seller's  pricing  and  the other terms of this
Agreement  are  predicated on the limitations of Seller's liability set forth in
above  and  acknowledges that Seller would not enter into this Agreement without
such  limitations.

8.     CONFIDENTIALITY.

8.1.     Confidentiality.  During  the  Term  and for five (5) years thereafter,
each party (the "Receiving Party") shall maintain in confidence all Confidential
Information  disclosed  to  it  by  the  other  party  (the  "Disclosing Party")
hereunder.  The  Receiving  Party  shall  not  use, disclose or grant use of the
Disclosing  Party's  Confidential  Information except as expressly authorized by
this  Agreement.  To the extent that disclosure is authorized by this Agreement,
the  Receiving  Party  will obtain prior agreement from its employees, agents or
consultants  to whom disclosure is to be made to hold in confidence and not make
use  of  such  information  for  any  purpose other than those permitted by this
Agreement. The Receiving Party will use at least the same standard of care as it
uses  to  protect  its  own  most  confidential  information to ensure that such
employees, agents or consultants do not disclose or make any unauthorized use of
such  Confidential  Information.  The  Receiving  Party will promptly notify the
Disclosing  Party  upon  discovery  of any unauthorized use or disclosure of the
Confidential  Information.

9.     INTELLECTUAL PROPERTY RIGHTS. Except for the right to possess and use the
Products  contemplated  by this Agreement, the delivery and sale of the Products
to  Customer (a) does not convey to Customer or any third party any Intellectual
Property  Rights  in  or  related  to  the  Products,  and (b) does not grant to
Customer or any third party any license under any patents or patent applications
of Seller except for the right to possess and use the Product in accordance with
this  Agreement.  Customer  shall  not, and shall not permit any third party to,
disassemble  or  analyze  the  physical  construction  of  any  Products (or any
component  thereof)  for  any  purpose.

10.     TERM  AND  TERMINATION.

10.1.     TERM.  This  Agreement shall become effective as of the Effective Date
and,  unless  terminated earlier pursuant to this Section 10, shall terminate on
July  31,  2005  (the  "Term").

10.2.     TERMINATION BY CUSTOMER. Customer may terminate this Agreement for any
reason  at any time by giving notice of termination to Seller.  Upon termination
by  Customer  under  this Section 10.2, (i) Customer will forfeit any unrefunded
portion  of  the  Deposit  according  to  the terms of Section 4.5; and (ii) all
purchase  orders  issued  prior to termination for delivery within 150 days will
remain  valid  and  in  full  effect.

                                       23
<PAGE>

10.3.     TERMINATION  BY  EITHER  PARTY.  Either  party  may  terminate  this
Agreement  on  thirty (30) days notice if Customer has not taken delivery of any
units of the Products for a period six (6) months prior to such notice date.  In
the event of any termination under this Section 10.3, all purchase orders issued
prior to such termination will remain valid and in full effect.  In the event of
any  termination  under  this Section 10.3, Customer will forfeit any unrefunded
portion  of  the  Deposit  according  to  the  terms  of  Section  4.5.

10.4.     Termination on Default.   Either party may terminate this Agreement if
the  other  party  fails to perform any material obligation under this Agreement
and  such  failure is not cured within thirty (30) days following written notice
of such failure to the defaulting party.  Upon termination by either party under
this  Section  10.4,  all  purchase  orders  issued  under  this Agreement shall
immediately  terminate.  In  event of any termination under this Section 10.4 by
Customer  for default by Seller, Seller shall immediately refund to Customer any
unrefunded  portion  of  the  Deposit  paid  by Customer under Section 4.5. Upon
Default by Seller, the parties hereby agree that Seller shall reimburse Customer
for  any  premium  cost ("cover cost") reasonably incurred by Customer to remedy
Seller's  Default.  Reimbursement  should  not exceed 15% sale price per unit of
all undeliverable units remaining. Customer shall be entitled to such additional
remedies  as  may  be available at law or in equity that are consistent with the
terms of this Agreement. In the event of any termination under this Section 10.4
by  Seller for default by Customer, Customer will forfeit any unrefunded portion
of  the  Deposit  according to the terms of Section 4.5.  For default by Seller,
Buyer  shall  have the right to manufacture or have manufactured the products at
its discretion.  To the extent that Buyer does not own the rights to the product
hardware  and  software,  Seller hereby grants to Buyer all rights necessary for
Buyer  to  produce,  manufacture  and/or  have  manufactured  quantities of such
product for distribution by Buyer.  Seller shall provide Buyer access to and use
of  all  items  that  are  necessary  and/or  useful  in  the manufacture of the
products,  including  but  not  limited to, Seller's drawings, software download
images,  bills  of  materials processes, tools, and vendor list.  Buyer reserves
the  right,  with advance notification, to facilities and resources until seller
is  once  again  able  to support the product adequately.  Seller shall bear all
costs  associated with the implementation of Buyer's management team, including,
but  not  limited  to,  travel,  lodging,  and  salary for each team member.  In
addition,  Seller shall bear all costs associated with Buyer's support requested
by  Seller.

10.5.     EFFECTS  OF  TERMINATION.  Upon  termination  or  expiration  of  this
Agreement  for  any  reason:

(a)     All  amounts  due  hereunder  shall  become immediately due and payable;

(b)     Except  for  obligations  arising  under  purchase  orders  that survive
termination of the Agreement, Seller shall have no further obligation to deliver
any  Products  to  Customer.

                                       24
<PAGE>

(c)     Each  party shall return or destroy all Confidential Information and any
copies  thereof,  disclosed  by  the  other  party  during  the  Term.

(d)     Sections 4 (as to accrued but unpaid amounts), 5, 6, 7, 8, 10.5, 10, and
11 shall survive any expiration or termination of this Agreement for any reason.
All  terms  and conditions of this Agreement shall survive as to purchase orders
remaining  in  effect  beyond  the  date  of  termination.

11.     COMPLIANCE  WITH  LAWS;  EXPORT RESTRICTIONS.  Customer shall obtain all
licenses,  permits  and  approvals required by any jurisdiction and shall comply
with  all  applicable  laws,  rules,  policies  and procedures of the applicable
government  and  any other regulatory agency that Seller notes are available for
export.  Customer  will  indemnify and hold Seller harmless from and against any
liability,  loss  and  expense  (including  without  limitation attorneys' fees)
attributable  to  any  violation  or alleged violation by Customer of such laws,
rules,  policies  or  procedures.  Customer  shall  not  transmit,  export  or
re-export,  directly  or  indirectly,  separately  or as part of any system, the
Product  or  any technical data (including processes and services) received from
Seller,  without  first  obtaining  any  license  required  by  the  applicable
government,  including  without limitation, the U.S. Government and/or any other
applicable  competent  authority.  By  accepting  delivery, Customer agrees that
none  of  the Products or technical data supplied by Seller under this Agreement
will  be  sold  or  otherwise  transferred  to any US-embargoed destination, any
entity  subject  to  a US denial order, or made available for use by or for, any
military  end-user.  Customer  also  certifies  that  none  of  the  products or
technical data supplied by Seller under this Agreement will be sold or otherwise
transferred  to, or made available for use by or for, any entity that is engaged
in the design, development, production or use of nuclear, biological or chemical
weapons  or  missile  technology.

12.     General  Provisions.

12.1.     ASSIGNMENT.  Customer  nor Seller may not assign this Agreement or any
right  under  this  Agreement, nor delegate any obligation under this Agreement,
without Customer or Seller's prior written consent.  Any attempted assignment or
delegation  in  contravention  of  this  Section  11.1  shall  be  void.

12.2.     NON-WAIVER;  SEVERABILITY.  Any  delay  or  failure by either party to
exercise  any right or remedy under this Agreement shall not constitute a waiver
of  such  right  or  remedy  thereafter or of any other right or remedy.  If any
provision  of  this  Agreement  is determined to be unenforceable, the remaining
provisions  shall  remain  in  full  force  and  effect.

12.3.     NOTICES.  All  notices and other communications provided for hereunder
shall  be in writing and shall be mailed by first-class, registered or certified
mail, postage paid, or delivered personally, by overnight delivery service or by
facsimile,  computer  mail  or  other  electronic  means,  with  confirmation of
receipt,  addressed  as  follows:

                                       25
<PAGE>


If  to  Seller:                    SBE,  Inc.
                                   4550  Norris  Canyon  Road
                                   San  Ramon,  CA  94583-1389
                                   Attn:  CFO
                                   Fax  No.  (925)  355-2033

If  to  Customer:                  Compaq  Computer  Corporation
                                   901  Page  Avenue
                                   Fremont,  CA  94538
                                   Attn:  CFO
                                   Fax  No:  (510)  354-4538

Either  party  may  by like notice specify or change an address to which notices
and  communications  shall  thereafter  be  sent.  Notices  sent  by  facsimile,
computer  mail or other electronic means shall be effective upon confirmation of
receipt,  notices  sent by mail or overnight delivery service shall be effective
upon  receipt or upon refusal of delivery, and notices given personally shall be
effective  when  delivered  or  when  delivery  is  refused.

12.4     Publicity. Seller and Customer agree that neither party shall originate
any  press  release  nor  other  public  announcement related to this Agreement,
written or oral, without the prior written consent of the other party, except as
required  by  law  or  a  court  order.

12.5     Force  Majeure. Seller will not be liable for damages caused by failure
to  ship,  or  delay in shipment, resulting from events beyond Seller's control,
such  as  governmental  order or regulation, war, war-like situations, threat of
war,  hostilities,  impossibility of acquisition of components by Seller through
no  fault  of Seller, mobilization, blockage, embargo, revolution, riot, general
strike, fire, flood, earthquake, tsunami, tornado, etc. Once the above causes of
delay  in  performance  are removed, Seller must make every reasonable effort to
allocate  production  capacity to meet the schedules established in all Customer
purchase  order(s).

12.6     Governing  Law  and  Venue.  The  laws of the State of California shall
govern  this  Agreement, as those laws are applied to contracts entered into and
to  be performed entirely in California-by-California residents. Recipient shall
submit  all  claims  it  may  desire  to bring arising out of or related to this
Agreement  or  any  breach  hereof  to a court of applicable jurisdiction in San
Francisco  County, California, and Recipient hereby consents to the jurisdiction
and  venue  of  such  court  if  Seller  brings  a  claim  in  such  court.

12.7     Injunctive  Relief.  The  parties  agree  that  any  unauthorized
duplication, distribution or disclosure of any of the other party's Confidential
Information  will  actually  and materially damage the Disclosing Party and such
damages are difficult to calculate. Seller and Customer agree to comply with the
Source  Control  Documents  as  agreed  to  by  the  parties.

                                       26
<PAGE>

12.8     Entire  Agreement;  Modifications.  This  Agreement,  together with the
exhibits  attached hereto, supersedes all prior oral or written negotiations and
agreements  between  the  parties with respect to the subject matter hereof.  No
modification, variation or amendment of this Agreement shall be effective unless
made  in  writing  and signed by the parties.  Any additional or different terms
stated  in  any purchase order or other document delivered to Seller by Customer
in  connection  with  this  Agreement shall have no effect. Any Master Agreement
shall  not  supersede  the  terms  and  conditions  of  this  Agreement.

In  Witness  Whereof,  Seller and Customer have each caused this Agreement to be
executed  by  their  duly  authorized  representatives as of the Effective Date.


           SBE,  INC.                              COMPAQ  COMPUTER  CORPORATION
           ("SELLER")                              ("CUSTOMER")


      By:  /s/  Timothy J. Repp                       By:  /s/  Robert M. Murden
          ----------------------                         -----------------------
Name:         Timothy J. Repp                            Name:  Robert M. Murden
            -------------------                               ------------------
Title:  Chief  Financial  Officer,                 Title:  Fremont Site Director
              Vice President                        BCSG Supply Chain Management
                                                          Compaq  Computers


                                       27
<PAGE>

                                    EXHIBIT A
                                   PRICE LIST

ITEM                                        PRICE  PER  UNIT  (US  DOLLARS)
- ----                                        -------------------------------
VCOM-33  Controller  Board  (U40567-A01)          [  ***  ]
VCOM-34  Controller  Board  (U32887-002)               [  ***  ]
VCOM-34  Controller Board (U25022-A04)               [ ***  ]

                              PRODUCT DESCRIPTIONS
                                     VCOM-34
     The  VCOM-34  is  a  high  performance,  68030-based,  multiprotocol serial
communications  controller for VME systems requiring a serial interface to links
transmitting  at  speeds  up  to E1 (2.048Mbps). Four full-duplex, independently
programmable  serial  channels  support  asynchronous, X.25-compatible HDLC, and
bisynchronous  protocols.  The  Zilog  Z16C30  Universal Serial Controller (USC)
coupled  with  a  custom  DMA Controller supports multiple lines at speeds up T1
(1.544Mbps)  or  E1.  The 25MHz 68030 with built-in memory management unit, 1 or
4Mbytes  of  parity-protected DRAM, and up to 1 Mbyte of EPROM provide the ideal
communications controller for high-performance front-end processor applications.
The  VCOM-34 is an excellent serial communications controller for minicomputers,
workstations,  or  data  networking  systems that require a powerful, high-speed
serial  interface  for  high-speed  data  transmission.

                                     VCOM-33

     The  VCOM-33  is  a  high-speed,  6U  VMEbus  interface  to  4  or  16Mbps
(selectable)  IEEE  802.5  Token  Ring  LANs.  Featuring  a  25MHz  68030
microprocessor,  the Texas Instruments TMS380C16 Compressor and 1 or 4 Mbytes of
DRAM,  the  VCOM-33  supports the network and transport layers of communications
protocols  such as TCP/IP. The Commprocessor executes MAC/LLC software (Type 1 &
2)  to  provide  data link level functionality. An optional mezzanine board, the
VMM-34,  can  be added to provide four ports of high-speed, multiprotocol serial
I/O in one VME slot.  Suitable for a wide range of applications, the VCOM-33 can
act  as  a high-performance Token Ring interface for mini or super minicomputers
or,  with  the  optional  source  routing  accelerator,  as  a  controller  in
internetworking  products.


***  CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE  SECURITIES  AND  EXCHANGE  COMMISSION.  CONFIDENTIAL  TREATMENT  HAS  BEEN
REQUESTED  WITH  RESPECT  TO  THE  OMITTED  PORTIONS.
                                       28
<PAGE>

                                    EXHIBIT B
                            PRODUCT LIMITED WARRANTY


SBE,  Inc.,  is  a  California  corporation doing business at 4550 Norris Canyon
Road,  San Ramon, California U.S.A. 94583-1369, (800) 214-4SBE  (herein referred
to  as  "SBE")  and  is  the  Warrantor  of  SBE's  Product.

DEFINITION  OF  TERMS

Product  -  Any board level or   system product that was manufactured or sold by
SBE  to  Customer.

Original  Shipping  Configuration  -  The  configuration  in  which  Product  is
originally  shipped  from  SBE.

LIMITED  WARRANTY  PERIOD

Product  is  warranted  for  a  period  of  twelve  (12) months from the date of
original  shipment  from  SBE  to  Customer  ("Limited  Warranty Period").  When
Product  is  purchased  from  SBE for resale to Customer's customer, the Limited
Warranty  shall  be  valid  for  the  remainder of the original Limited Warranty
Period.  However, SBE will repair the Product or, at its option, replace Product
with  a product of like kind under this Limited Warranty for Customer only.  Any
software  product  is  covered by warranties specified in its individual license
agreement.

COVERED  ITEMS

The  Limited  Warranty  shall cover defects in workmanship or material and shall
conform  to  SBE's  then-current  Product Specification for the Limited Warranty
Period.

LIMITED  WARRANTY  CONDITIONS

This  Limited  Warranty  is  subject  to  the  following  conditions:

1.     This  Limited  Warranty  shall  cover only Product that is sold by SBE to
       Customer.

2.     Product  must  be  eligible  for  this  Limited  Warranty.

3.     SBE  shall  deem  Product  ineligible  for  this  Limited Warranty if it:

     has  been  physically  and/or  electrically  abused;

     has been altered by cutting the board, changing components to devices other
     than the device type originally supplied, changing the wiring, or any other
     alterations  that substantially changes the characteristics of Product such
     that  it  cannot  be  tested with normal testing procedures used by SBE; or

     has  been  damaged  due  to  Electrostatic  Discharge  (ESD).

                                       29
<PAGE>

     In  the event Customer requires repair of Product and Product is ineligible
for  warranty repair, SBE shall provide a repair quotation to Customer and await
written  instructions  from  Customer  to  either authorize the repair or return
Product  without  repair.

4.     Changing jumper configurations and adding normal Product options supplied
by  SBE  are  considered normal usage, and are not a condition of ineligibility.
Any  change  made  to  Product  by Customer, including implementing SBE-approved
Revision  Change  Notices  (RCN), must be performed competently to avoid being a
condition  of  ineligibility.

5.     To return a Product for repair under this Limited Warranty, Customer must
contact  SBE  and  obtain  a  Return  Material  Authorization  (RMA) number, and
instructions  for  returning  the  defective  Product.  The  RMA  number MUST be
contained  in  the  shipping documents on the outside of the Product's packaging
when  returned  to  SBE.

     SBE  shall,  as  Customer's  sole  and  exclusive remedy and SBE's sole and
exclusive  obligation  for  breach of this limited warranty and at SBE's option,
either  repair  Product  or  replace  Product  with a product of like kind at no
charge,  and  ship  it  back  to  Customer  within  thirty (30) days, subject to
availability  of  Product  or  repair  parts.  SBE  will  notify Customer if the
repairs  will  take  longer  than  thirty  (30)  days.  Any replaced or repaired
Product  shall  be  warranted  for  ninety  (90) days or for the duration of the
initial  Limited  Warranty  Period,  whichever  is  longer.

6.     Product  should  be  restored  to  its Original Shipping Configuration by
Customer  for  testing and repair.  If Product is sent to SBE in a configuration
other  than the Original Shipping Configuration, SBE will restore Product to the
Original  Shipping  Configuration  to  facilitate  testing  and  repair.  Any
components  removed  from  Product  to  restore  it  to  its  Original  Shipping
Configuration will be returned to Customer with Product, whenever possible.  SBE
will  not  be  liable  for loss of such components.  Product will be returned to
Customer  in  the  Original  Shipping  Configuration  after  repair and testing.

7.     Upon  request  from  the  Customer,  any Customer approved RCN's shall be
added  to  repaired  Product.  Customer  shall notify SBE upon receipt of an RMA
number.

8.     For  Product  covered  under  this  Limited  Warranty, Customer shall pay
shipping charges to send Product to SBE for repair.  After repair, SBE shall pay
shipping  charges to return Product to Customer using the same method as used by
Customer.  Unless  mutually agreed by both parties, SBE shall not pay (a) excess
shipping  charges  if  shipping  method  specified by Customer is different than
Customer  used  to  send  Product  to  SBE;  or  (b)  any  costs associated with
import/export  fees.

9.     SBE  reserves  the  right  to  invoice  Customer for all costs (including
transportation  both  ways,  expenses  associated with import/export, labor, and
parts)  if  Product  returned  for  repair  under  this Limited Warranty was not
defective  or  otherwise  not  covered  under  this  Limited  Warranty.
                                       30
<PAGE>
10.     SBE  shall  not  be  liable  for  damage  sustained  during  shipment.

IN  NO EVENT WILL SBE BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES THAT
RESULT FROM THE USE OR FAILURE OF ANY SBE PRODUCT, EVEN IF SBE HAS BEEN INFORMED
OF  THE  POSSIBILITY  OF  SUCH  DAMAGES.

EXCEPT  FOR  THE  EXPRESS  WARRANTIES  SET  FORTH HEREIN, NO OTHER WARRANTIES OR
CONDITIONS (EXPRESS OR IMPLIED, ARISING BY STATUTE OR OTHERWISE IN LAW OR FROM A
COURSE  OF  DEALING  OR  USAGE  OF TRADE) ARE MADE OR GIVEN.  IN PARTICULAR, SBE
SPECIFICALLY  DISCLAIMS  ANY  IMPLIED  WARRANTY OR CONDITION OF MERCHANTABILITY,
MERCHANTABLE  QUALITY,  OR  FITNESS  FOR  ANY  PURPOSE,  PARTICULAR, SPECIFIC OR
OTHERWISE.


                                       31
<PAGE>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-11.1
<SEQUENCE>3
<FILENAME>doc3.txt
<TEXT>

EXHIBIT  11.1

<TABLE>
<CAPTION>


                                    SBE, INC.
             STATEMENTS OF COMPUTATION OF NET INCOME (LOSS) PER SHARE
            FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2001 AND 2000
                     (In thousands, except per share amounts)
                                   (Unaudited)

                                              Three months ended    Six months ended
                                                 April 30,                April 30,
                                                ----------               ----------

                                                 2001     2000        2001     2000
                                               --------  ------     --------  ------
BASIC
<S>                                            <C>       <C>        <C>       <C>
Weighted average number of
 common shares outstanding                       3,368    3,116       3,349    3,099
                                               --------  ------     --------  ------

Number of shares for computation of
 net income (loss) per share                     3,368    3,116       3,349    3,099
                                               ========  ======     ========  ======

Net income (loss)                              $(3,212)  $1,984     $(4,525)  $2,944
                                               ========  ======     ========  ======

Net income (loss) per share                    $ (0.95)  $  .64     $ (1.35)  $ 0.95
                                               ========  ======     ========  ======



DILUTED

Weighted average number of
 common shares outstanding                       3,368    3,116       3,349    3,099

Shares issuable pursuant to options granted
 under stock option plans, less assumed
 repurchase at the average fair market value
 for the period                                     (a)     601          (a)     448
                                               --------  ------     --------  ------

Number of shares for computation of
 net income (loss) per share                     3,368    3,717       3,349    3,547
                                               ========  ======     ========  ======

Net income (loss)                              $(3,212)  $1,984     $(4,525)  $2,944
                                               ========  ======     ========  ======

Net income (loss) per share                    $ (0.95)  $ 0.53     $ (1.35)  $ 0.83
                                               ========  ======     ========  ======

(a)  In loss periods, common share equivalents would have an antidilutive effect
on  loss  per  share  and  therefore  have  been  excluded.
</TABLE>


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
