CUPERTINO, California (CNN) -- The iMac -- the tubby little computer-that-could -- has lifted Apple Computer's profits, raised the morale of its employees and buoyed the hopes of Macintosh devotees that their way of computing will survive.

On Wednesday, Apple reported its first profitable fiscal year since 1995, earning $309 million for the 12 months ending September 30, compared to a loss of $1.05 billion for the previous year.

The computer maker said sales of its new iMAC, which went on the market in mid-August, helped it earn $106 million in its fourth quarter. That compares with a loss of $161 million for the same period a year ago.

The iMac uses the Macintosh platform but, at $1,300, is more affordable than previous incarnations of the Mac.

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In just six weeks, Apple sold 278,000 iMacs. And about 40 percent of the buyers are new to the Apple Macintosh system, which had been losing ground rapidly in recent years to computers using the rival Microsoft Windows platform.

"A tremendous downward trend has now bottomed out," said Steve Jobs, Apple's co-founder and chief executive officer.

"Apple is starting to get back to innovation in software, which used to be their crown jewel," said industry analyst Tim Bajarin of Creative Strategies Inc. "I am absolutely convinced that Steve has turned things around, and you now have an Apple that is moving forward instead of moving back."

Apple took other steps to return to profitability. It slashed costs, trimmed its product line from 15 models to just four and introduced an updated version of its operating system. Apple also made major improvements to its animation playback software, Quicktime.

Many of the congratulations for Apple's turnaround are being directed toward Jobs, who returned to the company in 1996 after an absence of more than a decade. When he took the helm, the company had lost two CEOs in two years and appeared to be sinking fast.

Now, Apple is profitable again -- and it is once again producing a computer that's among the hottest in the business.

Correspondent Greg Lefevre contributed to this report.