<ARTICLE> 5 <CIK> 0000731647 <NAME> ZITEL CORPORATION <MULTIPLIER> 1000 <PERIOD-TYPE> 3-MOS <FISCAL-YEAR-END> SEP-30-1999 <PERIOD-START> JAN-01-1999 <PERIOD-END> MAR-31-1999 <CASH> 6,254 <SECURITIES> 0 <RECEIVABLES> 5,493 <ALLOWANCES> (1,291) <INVENTORY> 0 <CURRENT-ASSETS> 1,741 <PP&E> 3,639 <DEPRECIATION> (2,612) <TOTAL-ASSETS> 18,576 <CURRENT-LIABILITIES> 6,583 <BONDS> 0 <PREFERRED-MANDATORY> 0 <PREFERRED> 0 <COMMON> 66,280 <OTHER-SE> (59,179) <TOTAL-LIABILITY-AND-EQUITY> 18,576 <SALES> 4,239 <TOTAL-REVENUES> 4,239 <CGS> 1,451 <TOTAL-COSTS> 4,316 <OTHER-EXPENSES> (98) <LOSS-PROVISION> 0 <INTEREST-EXPENSE> 633 <INCOME-PRETAX> (2,063) <INCOME-TAX> 0 <INCOME-CONTINUING> (2,063) <DISCONTINUED> 0 <EXTRAORDINARY> 0 <CHANGES> 0 <NET-INCOME> (2,063) <EPS-PRIMARY> (.09) <EPS-DILUTED> (.09)