Compaq

(CPQ)

blew up last night, but many didn't think the explosion was as big as it could have been. It's sort of like expecting

Full Metal Jacket

, but getting

Casualties of War

. Both are bad, but one is much more intense.

Earnings and revenue estimates were dropped across the board on Friday morning as brokerages dealt with the fallout and got their numbers in line with Compaq's new guidance. Current Wall Street consensus is $1.07 a share, but that will certainly change once the analysts are through.

In a report entitled "Could Have Been Much Worse,"

Lehman Brothers

analyst Dan Niles cut his 2001 earnings target to 55 cents from $1.15 a share, which is way below last year's figure of 97 cents. He dropped his 2002 target to 80 cents a share from $1.35, also lower than 2000's earnings.

"Though the blowup was expected, it wasn't as bad as the first quarter of 1998 when revenues also declined 22% from quarter-to-quarter and earnings per share was negative," he wrote to investors. "We continue to recommend that those who do not have to invest in technology don't. The rest should look at the PC space as one of the most defensive."

Niles was the hardest on the company's forecasts. Kimberly Alexy, an analyst with

Prudential Securities

, dropped her 2001 target to 80 cents a share from 93 cents, while cutting 2002 to $1.12 from $1.18. "In our view, investors already factored in an earnings miss," she wrote, keeping the company at a strong buy. "The shares still offer a positive risk/reward tradeoff at current levels though catalysts are limited until visibility improves."

Kevin McCarthy,

Credit Suisse First Boston's

analyst, dropped his 2001 target to 85 cents from $1.08, based on flat revenue growth. His 2002 target was cut to $1.25 from $1.55, based on 10% growth.

Upgrades

Andrx

(ADRX)

: UP to buy from accumulate at Merrill Lynch.

Goldman Sachs

(GS) - Get Report

: UP to accumulate from neutral at

Merrill Lynch

.

Legg Mason

(LM) - Get Report

: UP to accumulate from neutral at Merrill Lynch.

Paychex

(PAYX) - Get Report

: UP to buy from hold at Credit Suisse First Boston.

Robert Mondavi

(MOND)

: UP to buy from hold at Credit Suisse First Boston.

Triad Hospitals

(TRIH)

: UP to strong buy from buy at

S.G. Cowen

.

Downgrades

Computer Sciences

(CSC)

: DOWN to market outperform from Goldman Sachs' buy list.

Intuit

(INTU) - Get Report

: DOWN to strong buy from single best idea list at Prudential; DOWN to market outperform from trading buy at Goldman Sachs.

Mercury Interactive Group

(MERQ)

: DOWN to buy from strong buy at

Deutsche Bank Alex. Brown

.

Oracle

(ORCL) - Get Report

: DOWN to buy from strong buy at Credit Suisse First Boston.

WebEx

(WEBX)

: DOWN to buy from strong buy at Deutsche Bank Alex. Brown.

Initiations

Intel

(INTC) - Get Report

: NEW buy at

Thomas Weisel Partners

.

Johnson & Johnson

(JNJ) - Get Report

: NEW strong buy at Prudential Securities; price target: $122.

McGraw-Hill

(MHP)

: NEW strong buy at Prudential Securities; price target: $74.

Riverstone Networks

(RSTN)

: NEW buy at S.G. Cowen; price target: $15.

StorageNetworks

(STOR) - Get Report

: NEW buy at S.G. Cowen; price target: $15.

Vertex Pharmaceuticals

(VRTX) - Get Report

: NEW strong buy at Prudential Securities; price target: $57.

Group Moves

After a couple of years away from the scene,

Bank of America Montgomery Securities

got back into the restaurant-rating business. The company started coverage with a bang, initiating a ton of names. OK, maybe that was an overstatement. The firm started 18 companies with two strong buys, 11 buys and five market performs.

Applebee's International

(APPB)

and

BUCA

(BUCA)

were started at strong buy.

Brinker International

(EAT) - Get Report

,

California Pizza Kitchen

(CPKI)

,

CEC Entertainment

(CEC)

,

Dave & Buster's

(DAB)

,

Jack in the Box

(JBX)

,

Morton's Restaurant Group

(MRG)

,

Panera Bread

(PNRA)

,

Rare Hospitality

(RARE) - Get Report

,

Ruby Tuesday

(RI)

,

Sonic

(SONC)

and

Wendy's International

(WEN) - Get Report

were all started at buy.

The

Cheesecake Factory

(CAKE) - Get Report

,

McDonald's

(MCD) - Get Report

,

Solutia

(SOI) - Get Report

,

Starbucks

(SBUX) - Get Report

and

Tricon

(YUM) - Get Report

were all started at market perform.