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Following in the footsteps of a business legend is never easy. It gets even tougher when an economic downturn follows hard on the heels of an economic upswing.

In 1998, when Craig Barrett replaced Andy Grove as CEO of Intel, the company was flying high as the world's number-one microchip maker. A technology-led boom was under way, and Intel prospered by manufacturing the innards for most of the world's PCs, as well as for other computing devices. Inspired in part by the rise of the Internet economy, the company expanded its investments in networking and communications chips, and in devices and services.

Three years later, the PC market has leveled off, and the Internet economy is under siege. Sales at Intel have declined steeply as a result, and the company announced in March that it would eliminate 5,000 jobs, mostly through attrition. Over the past six months, Barrett has rechanneled the company's resources into its core chip business, and he has retrenched on some of his efforts to diversify Intel -- including various Internet-services initiatives.

Yet Barrett has by no means given up on the Internet. Although he has set Intel on a back-to-basics course, he insists that the Net is now a basic part of how work gets done at the company. On his watch, Intel has etched the Internet into its operations with the same obsessive perfectionism that it applies to etching its chips. Today, by at least one reckoning, it is the world's largest e-commerce company, boasting $2 billion or more a month in online sales during 2000. It hosts an estimated 100,000 customized Web connections for external users, and it handles 80% of its direct product-materials expenditures online.

Barrett, 61, combines a rugged sensibility with a savvy outlook on technology. The owner of a 12,000-acre ranch in Montana, he looks as though he'd be more at home roping cows than holding court in a conference room. Indeed, he has the brusque, taciturn manner of a true Montana native, although he was born in San Francisco and raised in the Bay Area. He is a graduate of Stanford University, where he later became an associate professor of materials science and engineering. He joined Intel in 1974, rose through the ranks there, and was named president in 1997, a year before taking over the helm as CEO.

While it may be true that "only the paranoid survive" (in the immortal words of Chairman Grove), Barrett displays a steely-eyed optimism about his company's prospects amid the ups and downs of the Internet economy. "We expect that our networking and communications businesses will grow even faster than our old core business," he says. "It's a huge growth opportunity." He remains equally upbeat about the potential for turning Intel into a "100% e-business."

In an interview with Fast Company, Barrett discussed how Intel has transformed itself into a Net-centric company -- and why every company needs to make that transformation.

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