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 September 27, 1998

                                       OR

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

           For the transition period from __________ to ______________

                           Commission File No. 1-6462


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

      Massachusetts                                         04-2272148
(State or Other Jurisdiction                                (I.R.S.Employer
Incorporation or Organization)                              Identification No.)

321 Harrison Avenue, Boston, Massachusetts                     02118
 (Address of principal executive offices)                    (Zip Code)

                                  617-482-2700
              (Registrant's telephone number, including area code)



      Indicate by check mark whether the registrant: (1) has filed all 
reports required to be filed by Section 13 or 15(d)of the Securities Exchange 
Act of 1934 during the preceding 12 months (or for such shorter period that 
the registrant was required to file such reports), and (2) has been subject to
the filing requirements for the past 90 days. Yes X No _

     The number of shares outstanding of the registrant's only class of 
Common Stock as of October 25, 1998 was 84,156,169 shares.

                                      -1-




                                 TERADYNE, INC.
                                      INDEX



 


                                                                                                        

                          PART I. FINANCIAL INFORMATION                                                  Page No.
                          -----------------------------                                                  --------
                                                                                                      
Item 1. Financial Statements:

         Condensed Consolidated Balance Sheets -
              September 27, 1998 (Unaudited) and December 31, 1997..........................................3

         Condensed Consolidated Statements of Income - (Unaudited)
              Three and Nine Months Ended September 27, 1998 and September 28, 1997.........................4

         Condensed Consolidated Statements of Cash Flows -  (Unaudited)
              Nine Months Ended September 27, 1998 and September 28, 1997...................................5

         Notes to Condensed Consolidated Financial Statements (Unaudited)...................................6-7

Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations.................................................8-10


                                      -2-


                                                           TERADYNE, INC.
                                               CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS
                                                                               September 27, 1998         December 31, 1997
                                                                               ------------------         -----------------
                                                                                  (Unaudited)
                                                                                             (In thousands)
                                                                                                       
Current assets:
   Cash and cash equivalents....................................................$      131,264            $      74,668
   Marketable securities........................................................        21,478                   18,693
   Accounts receivable..........................................................       281,097                  300,933
   Inventories:
         Parts..................................................................       188,290                  168,385
         Assemblies in process..................................................       108,359                  103,972
                                                                                --------------            -------------
                                                                                       296,649                  272,357
   Deferred tax assets..........................................................        40,530                   40,530
   Prepayments and other current assets.........................................        24,620                   19,902
                                                                                --------------            -------------
         Total current assets...................................................       795,638                  727,083
Property, plant, and equipment, at cost:........................................       838,637                  692,832
      Less: Accumulated depreciation............................................      (402,390)                (349,707)
                                                                                --------------            ------------- 
         Net property, plant, and equipment.....................................       436,247                  343,125
Long-term marketable securities.................................................        77,307                  156,574
Other assets....................................................................        23,108                   24,892
                                                                                --------------            -------------
         Total assets...........................................................$    1,332,300            $   1,251,674
                                                                                ==============            =============

                                   LIABILITIES
Current liabilities:
   Notes payable - banks........................................................$        6,313            $       6,632
   Current portion of long-term debt............................................         1,636                    1,807
   Accounts payable.............................................................        60,476                   58,685
   Accrued employees' compensation and withholdings.............................        67,717                   77,299
   Unearned service revenue and customer advances...............................        64,274                   49,122
   Other accrued liabilities....................................................        61,634                   65,642
   Income taxes payable.........................................................         3,407                   18,786
                                                                                --------------            -------------
         Total current liabilities..............................................       265,457                  277,973
Deferred tax liabilities........................................................        23,429                   23,429
Long-term debt..................................................................        12,716                   13,141
                                                                                --------------            -------------
         Total liabilities......................................................       301,602                  314,543
                                                                                --------------            -------------

                              SHAREHOLDERS' EQUITY

Common stock $0.125 par value; 250,000 shares authorized;
   84,064 and 83,303 shares issued and outstanding after deduction of reacquired
   shares in 1998 and 1997, respectively........................................        10,507                   10,413
Additional paid-in capital......................................................       326,182                  322,985
Retained earnings...............................................................       694,009                  603,733
                                                                                --------------            -------------
         Total shareholders' equity.............................................     1,030,698                  937,131
                                                                                --------------            -------------
         Total liabilities and shareholders' equity.............................$    1,332,300            $   1,251,674
                                                                                ==============            =============


<FN>
The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 are an integral part of the condensed consolidated financial statements.
</FN>

                                      -3-


                                                           TERADYNE, INC.
                                            CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                             (Unaudited)


                                                      For the Quarters Ended                       For the Nine Months Ended
                                                      ----------------------                       -------------------------
                                               September 27, 1998   September 28, 1997     September 27, 1998   September 28, 1997
                                               ------------------   ------------------     ------------------   ------------------
                                                                    (In thousands, except per share amounts)

                                                                                                                   
Net sales...................................       $   335,227       $        336,747          $   1,173,032        $      874,590

Expenses:
     Cost of products sold..................           216,131                190,651                714,535               508,234
     Provision for excess inventory.........            23,000                      0                 23,000                     0
                                                 --------------        ---------------         --------------        --------------
           Cost of sales....................           239,131                190,651                737,535               508,234
                                                 --------------        ---------------         --------------        --------------
     Engineering and development............            49,569                 41,663                147,655               117,606
     Selling and administrative.............            47,288                 51,685                163,550               139,917
                                                --------------         ---------------         --------------        --------------
                                                       335,988                283,999              1,048,740               765,757
                                                 --------------        ---------------         --------------        --------------

Income (loss) from operations...............             (761)                 52,748                124,292               108,833

Other income (expense):
    Interest income.........................             2,756                  5,198                  9,100                16,097
    Interest expense........................             (120)                  (553)                  (633)               (1,659)
                                                 --------------        ---------------         --------------        --------------

Income before income taxes..................             1,875                 57,393                132,759               123,271

Provision for income taxes..................               600                 18,196                 42,483                41,912
                                                 --------------        ---------------         --------------        --------------

Net income..................................     $       1,275         $       39,197          $      90,276         $      81,359
                                                                                                                      
                                                 ==============        ===============         ==============        ==============

Net income per common share - basic.........     $        0.02         $         0.47          $        1.08         $        0.98
                                                 ==============        ===============         ==============        ==============

Net income per common share - diluted.......     $        0.01         $         0.45          $        1.05         $        0.94
                                                 ==============        ===============         ==============        ==============

Shares used in calculations of net income
    per common share - basic................            84,019                 83,515                 83,773                83,439
                                                 ==============        ===============         ==============        ==============

Shares used in calculations of net income
    per common share - diluted..............            85,626                 86,944                 85,729                86,346
                                                 ==============        ===============         ==============        ==============


<FN>
The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 are an integral part of the condensed consolidated financial statements.
</FN>

                                      -4-


                                                        TERADYNE, INC.
                                          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (Unaudited)


                                                                                 For the Nine Months Ended
                                                                                 -------------------------
                                                                          September 27, 1998       September 28, 1997
                                                                          ------------------       ------------------
                                                                                         (In thousands)
                                                                                                      
Cash flows from operating activities:
     Net income........................................................        $       90,276         $        81,359
     Adjustments to reconcile net income to net cash
           provided (used) by operating activities:
        Depreciation...................................................                55,070                  43,083
        Amortization...................................................                   676                     940
        Provision for excess inventory.................................                23,000
        Deferred income taxes..........................................                                          (55)
        Other non-cash items, net......................................               (3,335)                   1,082
        Changes in operating assets and liabilities:
             Accounts receivable.......................................                19,836                (78,792)
             Inventories...............................................              (47,292)                (82,509)
             Other assets..............................................               (3,610)                   1,168
             Accounts payable and accruals.............................                 3,352                   5,833
             Income taxes payable......................................               (9,542)                  24,642
                                                                                --------------         ---------------
                 Net cash provided (used) by operating activities......               128,431                 (3,249)
                                                                                      
Cash flows from investing activities:
     Additions to property, plant and equipment........................              (98,079)                (62,761)
     Increase in equipment manufactured by the Company.................              (46,469)                (11,067)
     Purchases of available-for-sale marketable securities.............              (61,333)               (139,429)
     Maturities of available-for-sale marketable securities............               157,512                 101,405
     Purchases of held-to-maturity marketable securities...............              (19,697)               (111,033)
     Maturities of held-to-maturity marketable securities...                                                  144,721
                                                                                -------------          ---------------
                 Net cash used by investing activities.................              (68,066)                (78,164)



Cash flows from financing activities:
     Payments of long term debt........................................               (1,222)                 (1,948)
     Acquisition of treasury stock.....................................              (22,256)                (73,603)
     Issuance of common stock under employee stock
         option and stock purchase plans...............................                19,709                  41,493
                                                                              ----------------         ---------------
                 Net cash flows used by financing activities...........               (3,769)                (34,058)
                                                                              ----------------         ---------------

Increase (decrease) in cash and cash equivalents.......................                56,596               (115,471)
Cash and cash equivalents at beginning of period.......................                74,668                 201,452
                                                                              ---------------          ---------------
Cash and cash equivalents at end of period.............................       $       131,264          $       85,981
                                                                              ================         ===============

Supplementary disclosure of cash flow information:
        Cash paid during the period for:
               Interest................................................       $           656          $        1,733
               Income taxes............................................                49,494                  20,894






<FN>
The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 are an integral part of the condensed consolidated financial statements.
</FN>

                                      -5-


                                 TERADYNE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

 
A. The Company

     Teradyne, Inc. (the "Company") designs, manufactures, markets, and services
electronic test systems and related software used by component  manufacturers in
the  design  and  testing  of  their   products  and  by  electronic   equipment
manufacturers for the design and testing of circuit boards and other assemblies.
Manufacturers use such systems and software to increase product performance,  to
improve   product   quality,   to   shorten   time   to   market,   to   enhance
manufacturability,  to conserve labor costs, and to increase  production yields.
The Company's  electronic systems are also used by telephone operating companies
for the testing and maintenance of their subscriber  telephone lines and related
equipment.

     The Company also manufactures backplane connection systems, principally for
the computer, telecommunications, and military/aerospace industries. A backplane
is an assembly,  into which printed  circuit boards are inserted,  that provides
for the interconnection of electrical signals between the circuit boards and the
other elements of the system.

B. Accounting Policies

   Basis of Presentation

     The consolidated  financial  statements include the accounts of the Company
and its  subsidiaries.  All significant  intercompany  balances and transactions
have been  eliminated.  The year-end  condensed  balance sheet data were derived
from audited financial  statements,  but do not include all disclosures required
by generally accepted accounting principles.

   Preparation of Financial Statements

     The accompanying condensed consolidated financial statements are unaudited.
However,  in the opinion of  management,  all  adjustments  (consisting  only of
normal  recurring  accrual  entries)  necessary for a fair  presentation of such
information  have  been  made.  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 dates of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reported periods. Actual results could differ from those estimates.

                                      -6-


                                 TERADYNE, INC.
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
                                   (Unaudited)

C.   Recently Issued Accounting Standards

     In June 1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Statement of Financial  Accounting  Standard (SFAS) No. 131,  "Disclosure  about
Segments of an Enterprise and Related  Information," which changes the manner in
which public companies report information about their operating  segments.  SFAS
No.  131,  which is based  on the  management  approach  to  segment  reporting,
establishes requirements to report selected segment information quarterly and to
report entity-wide disclosures about products and services, major customers, and
the geographic  locations in which the entity holds assets and reports  revenue.
Management is currently  evaluating  the effects of this change on its reporting
of segment information.  The Company will adopt SFAS No. 131 for its fiscal year
ending December 31, 1998.

     In February  1998,  the FASB issued SFAS No. 132,  "Employers'  Disclosures
about Pensions and Other  Postretirement  Benefits,"  which sets forth increased
disclosure   requirements  for  public  entities.  SFAS  No.  132  only  affects
disclosure  issues and does not change any existing  measurement  or recognition
provisions  previously  required.  The  statement is effective  for fiscal years
beginning  after  December 15,  1997.  Reclassification  for earlier  periods is
required  for  comparative  purposes.  Management  is currently  evaluating  the
effects of this change on its  reporting  of pensions  and other  postretirement
benefits.  The  Company  will  adopt SFAS No.  132 for its  fiscal  year  ending
December 31, 1998.
 
     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging  Activities."  SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current  earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction.  The statement
is effective  for fiscal years  beginning  after June 15,  1999.  Management  is
currently  evaluating the effects of this change on its recording of derivatives
and hedging activities.  The Company will adopt SFAS No. 133 for its fiscal year
ending December 31, 2000.

     In March 1998,  the  American  Institute of  Certified  Public  Accountants
issued Statement of Position (SOP) 98-1, "Internal Use Software," which provides
guidance on the accounting  for the costs of software  developed or obtained for
internal use. SOP 98-1 is effective for fiscal years  beginning  after  December
15, 1998.  Management does not expect the statement to have a material impact on
its financial position or results of operations.


D. Net Income per Common Share

     The  following  table sets forth the  computation  of basic and diluted net
income per common share (in thousands, except per share amounts):


                                                                   For the Quarters Ended                For the Nine Months Ended
                                                                   ----------------------                -------------------------
                                                                September 27,    September 28,        September 27,    September 28,
                                                                     1998             1997                 1998             1997
                                                                     ----             ----                 ----             ----

                                                                                                                  
Net Income..............................................            $ 1,275        $ 39,197              $ 90,276        $ 81,359
                                                                    =======        ========              ========        ========

Shares used in net income per common share - basic......             84,019          83,515                83,773          83,439
     Effect of dilutive securities:.....................
         Employee and director stock options............              1,045           3,073                 1,649           2,696
         Employee stock purchase rights.................                562             356                   307             211
                                                                     ------          ------                ------          ------
     Dilutive potential common shares...................              1,607           3,429                 1,956           2,907
                                                                     ------          ------                ------          ------
Shares used in net income per common share - diluted....             85,626          86,944                85,729          86,346
                                                                     ======          ======                ======          ======

Net income per common share - basic.....................         $     0.02      $     0.47            $     1.08      $     0.98
                                                                 ==========      ==========            ==========      ==========

Net income per common share - diluted...................         $     0.01      $     0.45            $     1.05      $     0.94
                                                                 ==========      ==========            ==========      ==========

<FN>
     For purposes of computing  diluted  earnings  per share,  weighted  average
common share  equivalents  do not include stock  options with an exercise  price
that exceeds the average fair market value of the Company's common stock for the
period.  Options  to  purchase  3,989,608  and 0 shares  of  common  stock  were
outstanding  during the three months ended  September 27, 1998 and September 28,
1997,  respectively,  but were not  included in the  calculation  of diluted net
income per common share.  Options to purchase  2,467,338  and 515,517  shares of
common stock were  outstanding  during the nine months ended  September 27, 1998
and September 28, 1997,  respectively,  but were not included in the calculation
of diluted net income per common share.
</FN>

                                      -7-


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


                                      SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED
                                                        STATEMENTS OF INCOME



                                                     For the Quarters Ended                      For the Nine Months Ended
                                                     ----------------------                      -------------------------
                                            September 27, 1998     September 28, 1997     September 27, 1998    September 28, 1997
                                            ------------------     ------------------     ------------------    ------------------
                                                         (In thousands)                               (In thousands)

                                                                                                            
Net sales..............................      $        335,227       $       336,747        $      1,173,032       $       874,590
                                             =================      ================       ================       ================

Net income.............................      $          1,275       $        39,197        $         90,276       $        81,359
                                             =================      ================       ================       ================

Percentage of net sales:
     Net sales.........................                  100%                  100%                   100%                    100%
     Expenses:
        Cost of products sold..........                   64                    57                     61                      58
        Provision for excess inventory.                    7                     0                      2                       0
                                              ----------------      ----------------       ----------------        ---------------
              Cost of sales............                   71                    57                     63                      58
         Engineering and development...                   15                    12                     13                      14
         Selling and administrative....                   14                    15                     14                      16
         Interest, net.................                   (1)                   (1)                    (1)                     (2)
                                              ----------------      ----------------       ----------------        ---------------
                                                          99                    83                     89                      86

     Income before income taxes........                    1                    17                     11                      14
     Provision for income taxes........                    1                     5                      3                       5
                                              ----------------      ----------------       ----------------        ---------------
     Net income........................                    0%                   12%                     8%                      9%
                                              ================      ================       ================        ===============

Provision for income taxes as a 
     percentage of income before taxes.                   32%                   32%                    32%                     34%
                                              ================      ================       ================        ===============



Results of Operations
- ---------------------

     Sales of $335.2 million in the third quarter of 1998 decreased $1.5 million
from the third quarter of 1997.  The overall  decrease in sales was due to a 15%
decrease in shipments of semiconductor  test systems offset by a 46% increase in
sales of circuit  board test  systems and a 30%  increase in sales of  backplane
connection  systems.  Third quarter of 1998 income before income taxes decreased
$55.5 million from the third quarter of 1997 to $1.9 million.  The third quarter
of 1998  results  included a pre-tax  provision  for excess  inventory  of $23.0
million. For the first nine months of 1998, income before income taxes increased
$9.5 million to $132.8 million.

     Incoming  orders were $244.8  million in the third quarter of 1998 compared
to $461.0  million in the third  quarter  of 1997.  The  decrease  in orders was
primarily  driven by a decrease  in  semiconductor  test  systems  orders  which
reflects the current industry conditions. Telecommunications test systems orders
also  declined.  Orders for  backplane  connection  systems  and  software  test
increased,  while circuit board test systems  orders  remained  flat. Due to the
decline in semiconductor test systems orders, the Company expects fourth quarter
of 1998  shipments  and  operating  income to decrease from the third quarter of
1998.  The Company's  backlog was $524.7 million at the end of the third quarter
of 1998 compared with $796.1 million at the end of the third quarter of 1997.

     Costs of products  sold as a percentage of sales  (excluding  the provision
for excess  inventory)  increased from 57% of sales in the third quarter of 1997
to 64% of sales in the third quarter of 1998 and from 58% of sales for the first
nine  months  of 1997 to 61% of sales  for the first  nine  months of 1998.  The
increase  in  cost  of  sales  was  due to the  following  factors.  First,  the
relationship of fixed  manufacturing  costs to the lower level of  semiconductor
test  sales.  Secondly,  the  higher  costs of sales  related  to the  increased
shipment of new  semiconductor  test systems  products.  Lastly,  an unfavorable
change in mix as sales of semiconductor test systems declined and sales of lower
margin backplane connection systems increased.

                                      -8-


  

     During the third  quarter of 1998,  the  Company  incurred a $23.0  million
pre-tax provision for excess inventory as inventory  quantities on-hand exceeded
current demand due to the sharp decline in incoming  semiconductor  test systems
orders coupled with the Company's  transition to new semiconductor  test systems
products.

     Engineering and development expenses,  as a percentage of sales,  increased
from 12% of  sales in the  third  quarter  of 1997 to 15% of sales in the  third
quarter of 1998.  Engineering and development spending increased $7.9 million in
the  third  quarter  of 1998  over the same  period  in 1997  due  primarily  to
increased  investment in new product  development of semiconductor test systems.
As a percentage of sales,  engineering and development expenses were 13% and 14%
in the first nine months of 1998 and 1997, respectively.

     Selling and administrative  expenses were 14% of sales in the third quarter
and first nine  months of 1998  compared  with 15% and 16% of sales in the third
quarter and first nine months of 1997, respectively.  Selling and administrative
expenses  decreased  $4.4  million  in the third  quarter  of 1998 over the same
period in 1997 due to lower  compensation  expenses  that  vary  with  operating
results.

     The  Company's  effective  tax  rate  for the  first  nine  months  of 1998
decreased  to 32% from a 34%  effective  rate for the first nine months of 1997.
The  Company's  effective  tax rate is below  the  statutory  rate of 35% due to
increased  utilization of export sales corporation benefits and certain research
and development tax credits.

Liquidity and Capital Resources 
- ------------------------------- 

     The Company's cash, cash  equivalents,  and marketable  securities  balance
decreased $19.9 million in the first nine months of 1998. The Company  generated
$128.4  million of cash from  operations  in the first nine months of 1998.  The
primary source of cash from operations was net income (plus non-cash charges for
depreciation and the provision for excess inventory) of $168.3 million.

     Cash was used to fund additions to property,  plant and equipment of $144.5
million  in the  first  nine  months  of 1998.  Property,  plant  and  equipment
expenditures relate primarily to construction of new and expanded facilities and
for  Company   manufactured   equipment  to  support  the   deployment   of  new
semiconductor test systems products. The Company purchased 0.6 million shares of
the  Company's  common stock for $22.3  million in the first nine months of 1998
under the Company's  stock buyback plan.  Cash of $19.7 million was generated in
the first  nine  months of 1998  from the sale of stock to  employees  under the
Company's stock option and stock purchase plans.

     The Company believes its cash, cash  equivalents and marketable  securities
balance of $230.0 million,  together with other sources of funds,  including the
available  borrowing  capacity  of  $120.0  million  under  its  line of  credit
agreement,  will be sufficient to meet working  capital and capital  expenditure
requirements over the next twelve months.

Certain Factors That May Affect Future Results 
- ---------------------------------------------- 

     From time to time, information provided by the Company,  statements made by
its employees or  information  included in its filings with the  Securities  and
Exchange  Commission  (including this Form 10-Q, the Company's  Annual Report of
Form  10-K,  and the  Company's  Annual  Report  to  Shareholders)  may  contain
statements  which  are  not  historical   facts,   so-called   "forward  looking
statements," which involve risks and uncertainties. In particular, statements in
"Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations"  relating to the  sufficiency of capital to meet working  capital
and  planned  capital  expenditure,  may  be  forward  looking  statements.  The
Company's  actual future results may differ  significantly  from those stated in
any forward looking statements. Factors that may cause such differences include,
but are not limited to, the factors discussed below. Each of these factors,  and
others,  are  discussed  from  time to time in the  Company's  filings  with the
Securities and Exchange Commission.

     The  Company's  future  results  are  subject  to  substantial   risks  and
uncertainties.  The  Company's  business  and  results of  operations  depend in
significant part upon capital  expenditures of manufacturers of  semiconductors,
which  in turn  depend  upon the  current  and  anticipated  market  demand  for
semiconductors  and products  incorporating  semiconductors.  The  semiconductor
industry has been highly cyclical with recurring  periods of over supply,  which
often have had a severe effect on the  semiconductor  industry's demand for test
equipment,  including  systems  manufactured  and marketed by the  Company.  The
Company believes that the markets for newer generations of  semiconductors  will
also be subject  to similar  fluctuations.  There can be no  assurance  that any
future increase in  semiconductor  test systems  bookings for a calendar quarter
will be sustained in  subsequent  quarters.  In addition,  any factor  adversely
affecting  the  semiconductor   industry  or  particular   segments  within  the
semiconductor  industry may adversely affect the Company's  business,  financial
condition and operating results.

                                      -9-



     Also, the Company relies on certain  intellectual  property  protections to
preserve its intellectual  property rights,  including  patents,  copyrights and
trade secrets. While the Company believes that its patents, copyrights and trade
secrets have value, in general no single one is in itself essential. The Company
believes  that its  technological  position  depends  primarily on the technical
competence and creative ability of its research and development personnel.  From
time to time the Company is notified that it may be in violation of patents held
by  others.  An  assertion  of  patent  infringement  against  the  Company,  if
successful, could have a material adverse effect on the Company or could require
a lengthy and  expensive  defense  which could  adversely  affect the  Company's
operating results.

     The   development   of  new   technologies,   commercialization   of  those
technologies into products,  and market acceptance and customer demand for those
products is critical to the Company's success.  Successful  product  development
and  introduction  depends  upon a number  of  factors,  including  new  product
selection,  development  of  competitive  products  by  competitors,  timely and
efficient completion of product design,  timely and efficient  implementation of
manufacturing  and  assembly  processes  and  product  performance  at  customer
locations.

     The Company faces substantial  competition  throughout the world, primarily
from electronic test systems  manufacturers located in the United States, Europe
and Japan, as well as internal test equipment groups at several of the Company's
customers.  Some of these competitors have  substantially  greater financial and
other resources to pursue engineering, manufacturing, marketing and distribution
of their  products.  Certain of the  Company's  competitors  have  introduced or
announced new products  with certain  performance  characteristics  which may be
considered  equal or superior to those  currently  offered by the  Company.  The
Company  expects its competitors to continue to improve the performance of their
current products and to introduce new products or new technologies  that provide
improved  cost  of  ownership  and  performance  characteristics.   New  product
introductions  by  competitors  could cause a decline in sales or loss of market
acceptance of the Company's existing products.  Moreover,  increased competitive
pressure  could  lead  to  intensified  price  based  competition,  which  could
materially  adversely  affect the Company's  business,  financial  condition and
results of operations.

     The  Company  derives  a  significant  portion  of its total  revenue  from
customers  outside  the  United  States.  International  sales  are  subject  to
significant  risks,   including  unexpected  changes  in  legal  and  regulatory
requirements  and policy  changes  affecting the Company's  markets,  changes in
tariffs, exchange rates and other barriers,  political and economic instability,
difficulties  in  accounts  receivable  collection,   difficulties  in  managing
distributors  and   representatives,   difficulties  in  staffing  and  managing
international operations,  difficulties in protecting the Company's intellectual
property and potentially adverse tax consequences.

     In the  recent  past there has been  significant  economic  instability  in
several  countries in Asia.  Continued  economic  instability would increase the
likelihood of either a direct or indirect adverse impact on the Company's future
results.

     The Company's quarterly and annual operating results are affected by a wide
variety  of  factors  that  could  materially   adversely  affect  revenues  and
profitability,  including:  competitive  pressures on selling prices; the timing
and  cancellation  of customer  orders;  changes in product mix;  the  Company's
ability  to  introduce  new  products  and   technologies  on  a  timely  basis;
introduction of products and technologies by the Company's  competitors;  market
acceptance of the Company's and its competitors' products; fulfilling backlog on
a timely basis; reliance on sole source suppliers; potential retrofit costs; the
level of orders  received  which can be shipped in a quarter;  and the timing of
investments  in engineering  and  development.  In  particular,  the Company has
introduced a significant  number of new,  complex test systems in 1996 and 1997,
and there can be no  assurance  that the Company will not  experience  delays in
shipment  of  such  products  or  that  such  products  will  achieve   customer
acceptance.  As a result of the  foregoing  and other  factors,  the Company may
experience  material  fluctuations in future operating results on a quarterly or
annual basis which could materially and adversely affect its business, financial
condition, operating results and stock price.
 
Year 2000 Readiness
- -------------------

     The "Year 2000 problem" arose because many existing  computer  programs use
only the last two digits to refer to a year. Therefore,  these computer programs
do not properly  recognize a year that begins with "20" instead of "19".  If not
corrected,  many computer  applications  could fail or create erroneous results.
The  company is  employing  a  combination  of  internal  resources  and outside
consultants to coordinate and implement its program for Year 2000 readiness.

     The Company has committed to having all current products Year 2000 ready in
advance  of the year  2000.  All of the  Company's  current  products  have been
assessed, using industry accepted test procedures, and most have been determined
to be Year 2000  ready.  The  Company  has also  evaluated  which of its  former
products,  still in use but no longer  sold,  will be made Year 2000 ready.  The
schedule of Company  products  which will or will not be made Year 2000 ready is
published and updated regularly by the Company on its web site.

     The Company has completed an inventory and assessment of internal  business
systems that use date-sensitive  software.  The Company is actively working with
suppliers and using consultants and applying internal  engineering  resources to
modify  or  replace  internal   business  systems  depending  on  the  level  of
criticality for the Company's ongoing operations.

     The  Company is also at risk of  disruption  to its  business  if Year 2000
problems  are  experienced  by its key  suppliers.  To mitigate  this risk,  the
Company has contacted  all of its suppliers to assess their Year 2000  readiness
and continually monitors the progress of its key suppliers.

     Most of the  Company's  effort  toward  Year  2000  readiness  is funded as
ongoing operating  expenses,  as a part of ongoing software support  operations.
The  Company is not able to estimate  the amount of  accelerated  upgrade  costs
which  have  been or will be  incurred  for third  party  software  or  systems.
Expenditures  directly  related to the Year 2000 readiness  program,  consisting
primarily of dedicated staff and consulting  services,  and is estimated at less
than $5.0 million through 1999.

     The Company believes that its Year 2000 readiness project will be completed
on a timely  basis,  in advance of the Year 2000 date  transition,  and will not
have a material adverse effect on the Company's  financial  condition or overall
trends  in its  operating  results.  However,  there  can be no  assurance  that
unexpected delays or problems, including failure of Year 2000 readiness programs
by its product and service suppliers,  will not occur and have an adverse effect
on  the  Company's  financial  condition  or  performance,  or  its  competitive
position.

     The  Company has not yet adopted  any formal  contingency  plans,  and will
determine  the  need  for  such  plans  as part  of its  ongoing  assessment  of
suppliers, products, and internal business systems.

                                      -10-








                                                          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.     

                                                                        TERADYNE, INC.
                                                                   ------------------------
                                                                          Registrant

                                                                     JEFFREY R. HOTCHKISS
                                                                   ------------------------
                                                                     Jeffrey R. Hotchkiss
                                                                      Vice President and 
                                                                   Chief Financial Officer

                                                                      November 11, 1998


                                      -11-