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About £32m - 30 per cent - was yesterday wiped off the value of McDonnell Information Systems, the computer software group, triggered by its second profits warning in four months.

Shares slumped 32p, from 106p to 74p, in MDIS, the biggest of a string of computer business flotation flops last year, after it said 1994 profits would significantly undershoot revised market expectations.

These were running at about £17m following the company's first profits warning at the time of the interim results last September. Analysts last night were further scaling down figures to about £8m-£10m.

MDIS, which floated at 260p last March, yesterday said second-half trading had failed to meet expectations at the time of the interims. It blamed continuing delays in getting orders in the local government and police service markets, and lower-than-expected orders from the health service. Additional factors included delays in the delivery of hardware, and no further big orders for its new PRO-1V IBS banking computer system in the second half. The Xerox Chess software business acquired last October madea trading loss of £2.5m following the purchase, for which MDIS has been largely compensated.

But one City analyst commented: "The City is worried whether further compensation will be forthcoming if additional losses are made. The company has not answered this point. The first warning diminished credibility. This one is more nightmarish."

The turbulence at the company is prompting senior management changes. Ian Knox has quit as finance director, with immediate effect. MDIS also said that a reorganisation was in train at the PRO-1V IBS arm, which would include senior management changes. R&D spending is also to be reviewed this year following a 10 per cent increase in 1994.

Some observers believe the company is not a straightforward turnaround situation because of its large dependence on three-year contractual agreements with clients such as the police force and hospitals. One analyst said: "They cannot just go in and take out a lot of costs immediately when they have these contracts to honour."

MDIS said it expected to pay out a final dividend of 3.95p, making 6.25p for the year.

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