APPLE'S CAN OF WORMS\Rumors of sale spur stocks.

Byline: Daily News Wire Services

Apple Computer Inc. denied Tuesday that it's for sale, seeking to contain a frenzy of speculation and shareholder anger about the growing crisis at the legendary computer maker.

Apple shares fell in after-hours trading, after Chairman Mike Markkula attempted to contain continuing rumors of an impending merger by flatly stating, "Apple is not for sale."

In Tuesday's regular trading session, Apple shares rose on heavy volume, while Sun Microsystems Inc.'s stock fell, after a published report quoted an unidentified person as saying that a merger of the two companies was "imminent."

The stock reversal came in a day in which Apple executives faced restive shareholders before retreating to a board meeting in which directors were expected to weigh strategies for reviving the company, which last week reported a $68 million loss for the first quarter and has seen its stock decline some 10 percent since the announcement two weeks ago.

Stuck with higher marketing and development costs than its competitors, and facing plunging personal computer prices, Apple has seen its profit margins erode in recent months.

Some shareholders Tuesday demanded the resignation of Apple's chief executive, Michael H. Spindler, but the company's chairman, Mike Markkula, said the entire board bore responsibility for Apple's troubles, and affirmed the company's confidence in Spindler.

Both Apple and Sun Microsystems declined to comment on the "imminent" merger report, published in The Wall Street Journal on Tuesday. And in the absence of an outright denial that a merger might be in the offing, and with Apple's board preparing to convene, investors bid up Apple's stock in the hopes that Sun Microsystems or another suitor might attempt to rescue the troubled personal computer maker.

Apple shares were up as much as $3.50 Tuesday, before Markkula's comments, and still ended the day at $31.625, up $1.125 on volume of 8.8 million shares. It was the NASDAQ's second-most active stock after Sun Microsystems. Shares of Sun fell $4.438 to $44.125 on volume of 13.36 million shares.

But as investors digested Markkula's comments, and industry analysts continued to say that an Apple-Sun match would be awkward, Apple gave back more than the day's gains, falling to $30.125 in after-hours trading.

Sun Microsystems was started in Mountain View, Calif., in 1982 by four 27-year-old engineers who realized there was a need for high-powered desktop workstations among their peers. Its present chief executive, Scott McNealy, was one of the founders.

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Photo (1--Color) Scott McNealy of Sun Microsystems Inc. may try a merger. (2--Color) Michael H. Spindler, president and CEO of Apple Computers Inc., has been blamed for the company's struggles. Associated Press Box (Color) WHERE SUN AND APPLE SHINE Associated Press