EXHIBIT 11.1



                                ZITEL CORPORATION

                   COMPUTATION OF NET INCOME (LOSS) PER COMMON
                           AND COMMON EQUIVALENT SHARE


                                            Year Ended September 30,       
                                     -------------------------------------
                                         1994         1995         1996
                                     -----------  -----------  -----------
Average common shares                
  outstanding                         12,654,000   14,158,000   14,726,000
                                     
Computation of incremental           
  outstanding shares                 
    Net effect of dilutive           
     stock options based             
     on treasury stock               
     method                                    0    1,008,000      900,000
                                     
                                      12,654,000   15,166,000   15,626,000
                                     
                                     
Net income (loss)                    $(6,961,000)  $8,526,000   $4,049,000
                                     
                                     
Net income (loss) per share          $     (0.55)  $     0.56   $     0.26
                                     
                            




Primary and fully  diluted  income (loss) per share differ by less than one cent
in all periods.








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