Dixons saw almost £3 knocked off its share price today after warnings over falling margins overshadowed rocketing profits. The group posted pre-tax profit of £299.4 million for the six months ended 13 November 1999, against the previous year's £68.9 million. Sales increased 18 per cent to £1.67 billion, with profit - after exceptionals and Freeserve losses - totalling £92.5 million. "We achieved a good performance in the first half in a deflationary retail environment," said Sir Stanley Kalms, Dixons chairman. "Over the Christmas period, the growth of digital technology and lower prices ensured sales remained strong, although there was a further reduction in gross margins." Dixons' share price had dropped 19 per cent to 1182 pence on the back of the news. The group has also outlined plans to spend £30 million on ecommerce over the next two years. Dixons said online sales for the first half were up six times on the previous year. "The Group believes that software is a category in which online sales will capture a large share of the market," it stated. Regarding Freeserve, Dixons said the ISP now had 1.6 million active users, up 400,000 from the start of the financial year. Total minutes online in the period were 4.1 billion, with page impressions in November up 72 per cent to 110 million. The company also announced it would return £121 million, or 25 pence per share, to shareholders as part of a company restructure. This will include setting up a new holding company for itself – "New Dixons" - and for Freeserve – "Freeserve Holdings". Elsewhere, Yahoo released its fourth quarter results, with pre-tax profits at $57.5 million, up on $12.8 million for the same quarter last year. Sales were $201.1 million against last year's $91.3 million. ® Related stories: Freeserve soars in first day trading Dixons sees sales and profit grow