UPDATE 1-Applied Micro Circuits posts Q1 profit

* Q1 profit $0.04/shr vs loss $0.08/shr

* Revenue down 26 percent

* Sees Q2 revenue up 5 pct-9 pct sequentially

July 30 (Reuters) - Microchip maker Applied Micro Circuits Corp (AMCC.O) posted a first-quarter profit, helped by a 13 percent drop in its operating expenses.

The company expects second-quarter revenue to rise 5 percent to 9 percent sequentially, it said on a conference call with analysts.

It expects second-quarter gross margins to remain flat, plus or minus half a point.

The company has an improved starting backlog position entering the September quarter, it said.

For the first quarter, Applied Micro Circuits earned $2.9 million, or 4 cents a share, compared with a loss of $5.2 million, or 8 cents a share, the previous year.

Excluding items, the company, whose offerings include network processors, storage processors and switch fabrics, earned 1 cent per share.

Revenue fell 26 percent to $45.1 million.

Analysts, on an average, were expecting the company to post a loss of 1 cent a share, before items, on revenue of $44.7 million, according to Reuters Estimates.

Shares of the Sunnyvale, California-based company closed at $7.68 Thursday on Nasdaq. (Reporting by Manasi Phadke in Bangalore; Editing by Jarshad Kakkrakandy)