In response to an ever-swirling rumor mill that has LaFace Records co-founder L.A. Reid replacing Clive Davis as the head of Arista Records, Davis issued a statement yesterday (11/17) denying that he intends to step down.

''I would like to make it clear that I have no plans whatsoever to retire,'' he said. ''At age 66, I am absolutely at the peak of my powers producing the Carlos Santana [ tickets ] and Whitney Houston [ tickets ] albums, each of which is generating spectacular multi-platinum sales.''

Davis, who founded Arista nearly 25 years ago, has built a reputation as a master at creating and picking hits. Of late, he has received praise for helping to line up an all-star roster--including Eric Clapton [ tickets ] and Matchbox 20's Rob Thomas [ tickets ]--for ''Supernatural,'' Santana's first hit album since the 1970s.

Davis is said to be in negotiations with Arista's parent company, Bertelsmann Music Group, and the discussions reportedly have addressed succession plans at Arista. BMG is a division of the privately-held German conglomerate Bertelsmann, which has a corporate policy requiring executives to retire at age 60. That has led to speculation that some highers-up at the parent company are trying to push Davis out.

''I will be weighing BMG's offers to me which involve both preserving my legacy and, ironically, major support of a new public media company that I would be forming,'' Davis said in the statement. ''I am also very moved by the overwhelming outpouring of support from my artists, the officers and employees of Arista and those in the industry. I fully intend to live up to my contract ending June 30, 2000.''

Davis' current contract, signed in 1995, was widely reported to be worth $50 million, and is said to contain clauses that could double that amount.

BMG Chairman Strauss Zelnick, in a statement released Wednesday, said ''his strong desire is to do right by Clive Davis.''

He continued, ''As CEO I have a responsibility to make decisions based on what's right for the company, and that includes making sure that we have an appropriate succession plan in place at Arista. While we generally do not comment on contract negotiations, everyone at BMG--especially me--hopes that Clive will stay on to continue building his legacy and ensuring Arista's continued success in the decades ahead.''

During a partnership with Bertelsmann that dates back to 1979, Davis has evidently operated Arista relatively free of interference from the parent company. Part of the reason for that could be Arista's money-making track record: though some labels have seen declining revenues during the industry's tumultuous process of consolidation in recent years, Arista has managed to thrive.

Earlier this year, Arista issued a statement claiming it finished its fiscal year on June 30 with sales of about $425 million, an all-time high. Besides the Santana release, the label's other recent success stories include albums from TLC, Sarah McLachlan, Alan Jackson, Whitney Houston and Monica.

But some have speculated that Arista's bottom line has been faltering, an assertion that Davis disputed in his hyperbole-laden statement.

''Arista itself has never been more successful in both sales and profits,'' he said. ''BMG has called Arista its 'crown jewel' for many years and that crown has never shined more brightly, with more new artists breaking and more established artists reaching new peaks than ever before.''

In record industry circles, Davis is considered a hands-on and effective leader. He has often claimed that he built his company's market share by keeping his artist roster relatively small and by working hard on artist development. He has also entered joint ventures with entrepreneurs like Reid and Kenneth ''Babyface'' Edmonds of LaFace and Sean ''Puffy'' Combs of Bad Boy, who have netted some of Arista's biggest successes.

''Clive has always been known as the man who can pick the hits,'' Whitney Houston said in a recent Los Angeles Times interview. ''That's his expertise, and you can't take that away from him. He knows what song I'm gonna kill, the way a designer knows what dress is right for a person.''

But Davis' career hasn't been without its missteps. Arista was the label responsible for bringing fame to Milli Vanilli, a duo that was forced to return its Grammy for Best New Artist when it was disclosed that the men who fronted the group didn't actually sing on their album.

And though credited with revitalizing Columbia Records during his tenure as the head of that label, he was fired in 1973 when the company accused him of using company money to pay for rental property and for his son's bar mitzvah. He attributed the incidents to an assistant's accounting mistakes.