A hard story to swallow at MDIS

If you like listening to tall stories, try this one around the Christmas fireside: shares in McDonnell Information Systems (MDIS), the troubled computer software group, are now so low that they represent good value on recovery grounds. This contrarian view could be heard around the City yesterday, which if nothing else confirms that the party season has been a particularly heady one.

After a series of three profit warnings and yesterday's news of pounds 20m of exceptional provisions and a passing of the dividend, shares in MDIS now trade at 36.5p, compared with 260p at the time of the flotation.

The first profits warning came within six months of the flotation and left shareholders casting suspicious glances at Barings Capital Investors, the venture capitalists, which made pounds 48m out of selling its stake in the company when the company was listed. A second profits warning came in January this year, causing the shares to fall from 106p to 74p as the company announced delays in orders from the public sector for its software equipment. And a third setback occurred in September, leading to the resignation of Jerry Causley, who brought the company to market, as chief executive.

After such a run of news one might have expected the market to be immune to bad tidings. Not so. Yesterday's exceptional provisions, uncertain trading and the passing of this year's final dividend, knocked a further 24p off the shares. Neither of the advisers to the flotation, Barings and NatWest Securities, will be allowed to forget this in a hurry.

Ian Hay Davison, the chairman, who fell ill at the tail-end of last year with pancreatitis, now thinks he has the blocks in place to build the company up again. After such a performance, however, to believe the story is over requires a double measure of Christmas spirit. Anybody tempted to spend a little pin money on the shares must regard it as no better than a throw of the dice.