Goodbye, Mr. Chips.

After a surprising warning

Thursday night,

Intel

(INTC) - Get Report

got Wall Street's brokerages talking prior to the market open on Friday morning. Most expressed caution to investors about owning the stock, while dropping their estimates lower to keep in line with new guidance from the chipmaker.

Intel's first-quarter revenue will drop 25%, instead of the 15% falloff the company had previously announced. Revenues will come in around $6.5 billion, much lower than the $7.4 billion expected by analysts and the previous quarter's $8.7 billion. That's quite a heavy slowdown. And since Intel is a technology linchpin, the news is quite bad for all of technology -- not just the company.

Intel shares were recently down $3.06, or 9%, from Thursday's closing price of $33.25.

Analysts grappled with the situation, firing off notes to anxious investors in need of advice about what they should do with their Intel stock. And since Intel did not give any specific earnings guidance in its call, only revenue guidance, analysts were forced to come up with their own forecasts. A wide variety of numbers for 2001 and 2002 have been unleashed on investors.

According to

Lehman Brothers

analyst

Dan Niles, Intel's woes are far from over.

"Intel sees no signs of a pickup and would not call this quarter the bottom for revenues," he said. "We do not think the bottom will be reached until the summer at the earliest and continue to be cautious on the stock."

Niles dropped his 2001 earnings-per-share estimate to 70 cents from 90 cents, while cutting his 2002 earnings-per-share target to 80 cents from $1.10. He maintained his market perform rating on the stock.

Merrill Lynch's

Joe Osha said he did not view the blue-chip as a core long-term holding in the semiconductor business.

"This latest miss reveals just how dependent Intel has become on high-end server and desktop businesses to sustain average selling prices that are under pressure," he wrote, dropping his 2001 earnings estimate to 81 cents from $1.17.

Credit Suisse First Boston

analyst

Charlie Glavin cut his price target to $30 from $33 and drastically hacked at his 2001 earnings estimate, cutting it to 56 cents a share from 92 cents -- a 39% reduction.

And don't count on personal computers to help bail out the company. "There are no clear catalysts for PCs, and we firmly believe that PCs will not lead the recovery, but will be a follower," he wrote.

The ripple effect of the Intel warning will shake the very foundation of the tech world.

Goldman Sachs'

Rick Sherlund said that Intel's preannouncement will raise eyebrows about

Microsoft's

(MSFT) - Get Report

quarter. And although he made no changes to his rating and estimates for the company, he did illustrate the incestuous nature of the technology field. When major companies warn, the damage is rarely isolated.

"Our estimates may still be a bit high, but the stock appears resistant to our somewhat moderate revenue estimate reductions," he wrote. "Our $6.2 billion estimate could be closer to $6.1 billion, if we were to presume even slower server growth, (implied by

Oracle's

(ORCL) - Get Report

preannouncement), even weaker advertising revenues, (implied by

Yahoo's

(YHOO)

preannouncement), and slower PC growth, perhaps implied by Intel's preannouncement."

Over at Merrill Lynch, analyst Alex Baluta wasted no time in cutting back his estimates on Microsoft, dropping his 2001 earnings per share target to $1.77 from $1.82. He maintained his long-term attractive rating on the stock, but cited Intel's weakness along with weak online advertising and the potential of a European slowdown as major factors in the call.

Other chipmakers felt the fury from Merrill. Analyst Eric Rothdeutsch trimmed his estimates on

Advanced Micro Devices

(AMD) - Get Report

, cutting his 2001 earnings target to $1.50 a share from $1.90 a share -- much lower than the current Wall Street consensus of $1.82 a share. His 2002 target was cut to $1.90 from $2.15, also lower than the consensus estimate of $2.22.

"Intel, last night in its preannouncement conference call, indicated that the slowdown seen over the last few quarters in the PC market has spread to its non-PC-related businesses, namely, server, cell phone and networking products across all sectors and geographies," he wrote.

AMD makes flash memory, an important component used in cell phones. As a result of Intel's falloff in its flash memory products, Rothdeutsch followed suit and adjusted his estimates accordingly. But, he maintained a buy rating on the company and said AMD's only real weakness was in flash memory. He believes that AMD is gaining market share for its Athlon processor against Intel's popular Pentium brand.

SG Cowen

examined the affect on the PC market, calling

Compaq

(CPQ)

the most exposed company among the names it tracks. According to the brokerage, which has a neutral rating on the company, Intel provided 14% of Compaq's fourth-quarter revenues. It was followed by

Dell

(DELL) - Get Report

, with 9% of its fourth quarter revenues from Intel, and

Hewlett-Packard

(HWP)

, which derived 4% of first-quarter revenues from its fellow blue-chip.

"In all of these cases, we have assumed weakness in the current quarter, although the Intel comment suggests that the softness may be more pronounced than we had assumed," the brokerage wrote to clients.

Analyst actions

Upgrades

Cytec Industries

(CYT)

: UP to U.S. Recommended for Purchase List from market outperform at Goldman Sachs.

Waste Management

(WMI)

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

Wausau-Mosinee Paper

(WMO)

: UP to U.S. recommended for purchase list from buy at Goldman Sachs.

Downgrades

Fleet Boston Financial

: DOWN to market outperform at

Salomon Smith Barney

.

Motorola

(MOT)

: DOWN to accumulate from buy at Merrill Lynch.

Initiations

Ace Limited

(ACL)

: NEW buy at Lehman Brothers; price target: $45.

HCC Insurance Holdings

(HCC) - Get Report

: NEW strong buy at Lehman Brothers; price target: $30.

ITT Indsutries

(ITT) - Get Report

: NEW market perform at Lehman Brothers; price target: $45.

Watson Pharmaceuticals

(WPI)

: NEW buy at

SG Cowen

; price target: $55.