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ZITEL RESTRUCTURES ON EARNINGS OUTLOOK

 FREMONT, Calif., Sept. 27 /PRNewswire/ -- Zitel Corp. (NASDAQ-NMS: ZITL) announced today that based on current projections the company will miss its goal of a return to profitability in the current quarter by a significant margin.
 Jack H. King, president and chief executive officer, said, "The business level for the company in the last two quarters of the calendar year is trending below the level necessary to support the return to profitability. Improvement in the first quarter of fiscal 1994 will depend upon our rate of entry into the UNIX Open Systems market and closing existing business opportunities."
 King continued, "I am pleased to report that early performance benchmarks of the CASD product on UNIX-based computer systems are showing significant performance improvements over available competitive products. While our entry into the UNIX Open Systems market is proceeding more slowly than planned, there is an excellent opportunity to derive incremental revenue by accelerating entry into this market. With the organization changes implemented, we have increased the focus on transition into new markets and reduction of the company's dependence on the Unisys mainframe market.
 "To adjust to these difficult times, the company has completed a further downsizing and restructuring. The changes made include the elimination of one vice president position, the consolidation and elimination of certain management positions and an overall reduction in force of approximately 25 percent. Additionally, the president and vice presidents have taken another voluntary reduction in salary until the company returns to profitability."
 King concluded, "The company's balance sheet remains strong. Progress on the joint development project with IBM continues satisfactorily. We continue to be optimistic that fiscal 1994 will be a strong year for the company."
 Zitel Corp. specializes in the design, manufacture and marketing of high performance storage subsystems and high speed data communications products for varied applications across a range of UNIX file-servers, mainframes and proprietary systems. These products are offered through systems integrators, value added resellers and distributors, OEMs and directly to Unisys mainframe end-users. The company is headquartered at 47211 Bayside Parkway, Fremont, CA 94538. Telephone, 510-440-9600 or (outside California) 800-622-5020. Fax, 510- 440-9666.
 NOTE: Zitel is a registered trademark of Zitel Corp. CASD(TM) is a registered trademark of Zitel Corp. All other product names and brand names are trademarks or registered trademarks of their respective holders.
 -0- 9/27/93
 /CONTACT: Henry C. Harris, chief financial officer of Zitel Corp., 510-440-9600 or, outside Calif., 800-622-5020/
 (ZITL)


CO: Zitel Corp. ST: California IN: CPR SU: ERP

TS-TM -- SJ004 -- 5764 09/27/93 07:54 EDT
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Publication:PR Newswire
Date:Sep 27, 1993
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