8-K

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

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported):   February 23, 2005

XETA Technologies, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma	0-16231	73-1130045
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1814 West Tacoma, Broken Arrow, Oklahoma		74012
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:  918-664-8200
(Former name or address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Item 2.02.  Results of Operations and Financial Condition.

On February 23, 2005, XETA Technologies, Inc. issued a press release reporting the Company’s financial results for the first quarter of fiscal 2005.  A copy of the Company’s press release is attached hereto as Exhibit 99.1.

Item 9.01.  Financial Statements and Exhibits.

(c)     Exhibits.

   99.1     Press release issued by XETA Technologies, Inc. dated February 23, 2005.

The information in this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing.

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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 hereunto duly authorized. 

	XETA TECHNOLOGIES, INC.
	(Registrant)
Dated:   February 23, 2005	By:	/s/ ROBERT B. WAGNER
		Robert B. Wagner
		Chief Financial Officer

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EX-99.1

	Exhibit 99.1
NEWS RELEASE
Date:	February 23, 2005
	FOR IMMEDIATE RELEASE
Contact:	Cheryl Moll
	XETA Technologies
	(918) 664-8200

XETA TECHNOLOGIES REPORTS
FIRST QUARTER RESULTS

Broken Arrow, OK - XETA Technologies (NASDAQ: XETA) today announced fiscal 2005 first-quarter earnings of $0.078 million, or $0.01 per share diluted, on revenues of $13.9 million for the period ending January 31, 2005.  These figures compare to revenues of  $16.9 million with earnings of $0.06 per share diluted for the first quarter of fiscal 2004.

According to Jack Ingram, CEO, “Revenues for the quarter, while down from our strong first quarter of fiscal 2004, were essentially at the run rates we experienced for the last three quarters of that year.  Earnings were slightly below our target range of $0.02 to $0.05 cents, but were generally in line with our expectations.  I am very pleased with our year-over-year increase in services revenues, driven by an 18% increase in the recurring portion of this all-important revenue stream.  This is a strong early indication that we are seeing the expected success in the startup of our Nortel initiative.”

“The first quarter was one of significant operational achievements,” stated Larry Patterson, Executive Director of Operations.   “The $1.2 million multi-site installation project for MARTA is approximately one-third complete.  This high profile and complex series of systems installations and/or moves, along with the related customer training is progressing very well.  The excellent results to date attest to the maturity of our technical expertise with the Nortel product portfolio.”

“In addition, we continue to expand the branch model of operations, which we initiated one year ago.  The Seattle branch has recently expanded into southern California, which is the first step in extending the Seattle branch model throughout the entire west coast.  During the quarter, we also opened a branch office in Denver, Colorado and established the sales and service expertise required to effectively compete in that market.  We now have three branch models in operation, Tulsa, Seattle and Denver and we continue to evaluate additional market opportunities,” added Patterson. 

According to Ingram, “Due to the heavy investments we have made in the buildup of our Nortel sales force, coupled with the aggressive expansion of our branch operations, earnings are expected to remain in this low to mid single digit range until traction is achieved.  We expect this traction by mid fiscal 2005 and remain confident in our published guidance for earnings of $0.20 cents for the year.”

XETA Technologies will host a conference call to discuss fiscal 2005 first-quarter results at 10 a.m. CST on Thursday, February 24.  The media, analysts and investors are invited to participate by dialing 877-209-0397.  A replay of the call will be available from 1:30 p.m. CST that day through 11:59 p.m. CST on March 3, 2005 by dialing 800-475-6701, access code 765662.

		Quarter Ending Jan 31st
		2005			2004
Sales	Systems		6,352			10,018
	Services		6,931			6,755
	Other		632			156
	Total		13,915			16,929
Gross Profit Margin			24	%		23	%
Operating Expense			3,248			3,001
Income from Operations			17			955
Interest and Other Income (Expense)			112			-30
Net Income After Tax			78			562
Basic Earnings Per Share		$	0.01		$	0.06
Diluted Earnings Per Share		$	0.01		$	0.06
Wt. Avg. Common Shares Outstanding			10,027			10,003
Wt. Avg. Common Equivalent Shares			10,074			10,209

(The information is presented in thousands except percentages and per-share data.)

			Jan 31, 2005		Oct 31, 2004
Assets	Current	Cash		65		141
		Receivables (net)		7,531		9,529
		Inventories (net)		6,112		4,845
		Other		2,053		1,557
		Subtotal		15,761		16,072
	Non-Current	Receivables (net)		257		297
		PPE (net)		10,677		10,727
		Goodwill & Intangibles		26,397		26,414
		Other		41		46
		Subtotal		37,372		37,484
	Total Assets			53,133		53,556
Liabilities	Current	Notes Payable		1,210		1,210
		Revolving Line of Credit		1,563		3,850
		Accounts Payable		4,216		2,452
		Unearned Revenue		2,040		1,559
		Accrued Liabilities		2,122		2,536
		Subtotal		11,151		11,607
	Non-Current	Long Term Debt		2,518		2,820
		Other		3,074		2,825
		Subtotal		5,592		5,645
	Total Liabilities			16,743		17,252
Equity				36,390		36,304

(The information is presented in thousands.)

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About XETA Technologies

XETA Technologies is a leading provider of communications solutions with sales and service locations nationwide, serving national business clients in sales, consulting, engineering, project management, installation and service support.  Through internal growth and corporate acquisitions, XETA is a frontrunner in the emerging, highly technical world of converged communications solutions for voice, data and video applications.   XETA is one of the largest providers of Avaya voice and data systems and has recently added the Nortel Networks product line of voice and data solutions.   XETA is also the largest distributor for Hitachi’s PBX group—the leading provider of communication systems for the lodging industry—and has long been recognized as the leading provider of call accounting solutions to the hospitality industry.

XETA Technologies has recently been recognized by Business 2.0 magazine’s “Fastest-Growing Technology Companies” and has also been recognized by Fortune Small Business magazine’s Top 100 Fastest-Growing Companies, Fortune magazine’s “100 Fastest-Growing Companies,” Forbes magazine’s “Best 200 Small Companies in America” and BusinessWeek’s  “Top 100 Hot Growth Companies.”  For more information about XETA Technologies, visit www.xeta.com

This news release contains forward-looking statements, which are made subject to the provisions of the Private Securities Litigation Reform Act of 1995.  These statements include statements concerning XETA's, revenues and earnings expectations during  fiscal 2005.  These and other forward-looking statements (generally identified by such words as "expects," "plans," "believes," "anticipates" and similar words or expressions) reflect management's current expectations, assumptions, and beliefs based upon information currently available to management. Investors are cautioned that all forward-looking statements are subject to certain risks and uncertainties which are difficult to predict and that could cause actual results to differ materially from those projected.  These risks and uncertainties include, but are not limited to, economic conditions in the United States and the telecommunications market specifically, the Company’s ability to successfully exploit the Nortel Networks market, changes in various vendor incentive programs that support the Company's sales and marketing efforts, the long term success of the Company’s growth strategies, market acceptance of and demand for the Company’s product and service offerings, competition, inflation, and the availability and retention of sales professionals and trained technicians.  Additional factors which could affect actual results are described in the section entitled "Outlook and Risk Factors" contained in the Company's Form 10-K for its fiscal year ended October 31, 2004, and its quarterly report on Form 10-Q to be filed for the first quarter of fiscal 2005.