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SANTA CLARA, Calif. - Applied Materials Inc. said Wednesday that its fourth-quarter net income fell by 40 per cent and announced it would cut 1,300 to 1,500 jobs to save money as it grapples with a business downturn.

The chip equipment maker said the job cuts represent 10 to 12 per cent of its global work force and are part of a restructuring plan to save $450 million a year. That's in addition to the $460 million in cost cuts it achieved in fiscal 2009, which ended Oct. 25.

Applied Materials said it expects to take a pre-tax charge related to its restructuring plan of $100 million to $125 million, most of which will be booked in the first quarter. The job cuts will be completed over the next 18 months.

The company earned $137.9 million, or 10 cents per share, in the quarter, compared with $231.1 million, or 17 cents, in the same quarter a year earlier.

Excluding one-time items, the company earned $177 million, or 13 cents per share, compared with $37 million, or three cents.

Sales fell 25 per cent to $1.53 billion from $2.04 billion. Results beat the three cents per share in profit expected by analysts polled by Thomson Reuters, and exceeded their revenue forecast of $1.32 billion.

Net sales fell in all business lines except for its display business, while operating income declined across the board. New orders fell for all units except display.

But compared to the third quarter, business improved sequentially.

For the year, Applied Materials lost $305.3 million, or 23 cents per share, compared with net income of $960.7 million, or 70 cents a share. Sales fell 38 per cent to $5.01 billion from $8.13 billion.

Applied Materials expects sales to increase by over 30 per cent in fiscal 2010, or roughly $6.5 billion. That's higher than analysts' forecast of $6.2 billion.

Shares of Applied Materials, based in Santa Clara, Calif., rose 16 cents to $13.41 in after-hours trading. The stock ended the regular session at $13.25, up 25 cents.