Applied Materials reported its first profitable quarter in 12 months, a signal that recovery in the chip business is finally under way.

``The fourth-quarter results indicate what we believe is a turning point for the semiconductor equipment industry,'' Chief Executive Mike Splinter said during a conference call with analysts Wednesday. ``We are seeing an improving environment that cuts across most segments and geographies.''

For the fiscal fourth quarter, the Santa Clara company reported net income of $15.5 million, or 1 cent a share, a 90 percent decline compared with the $147.2 million, or 9 cents a share, it reported for the same quarter a year ago.

Excluding charges related to the closing of facilities and job cuts, Applied Materials said it earned $95.5 million or 6 cents a share, a penny more than analysts surveyed by Thomson First Call had expected.

Fiscal fourth-quarter sales of $1.22 billion, though down 16 percent from the year before, were above the $1.14 billion that analysts had expected.

The company said sales were driven by consumer demand for wireless products and flat-panel displays. More than 30 percent of new orders were for 90 nanometer devices, indicating a successful transition to more advanced technologies.

Applied Materials reported new orders of $1.3 billion, up 21 percent from the third fiscal quarter but down 18 percent from the year-ago period.

New orders to continue to grow 20 percent in the first fiscal quarter, the company said. However, revenues are expected to only grow 5 percent to 8 percent.