Tivo (TIVO) rumors are wishful thinking; stock rises 18% on merger speculation

Tivo's (TIVO) stock price jumped 18% today (plus another 2% in the aftermarket) on rumors that Apple (AAPL) is reportedly interested in buying the company.  Here's why the rumors are probably just wishful thinking by Tivo shareholders.

Here's why it could happen:

• With a net cash position of over $6 billion, annualized free cash flow of $1.3 billion (past four quarters) and a stock price at its all time high, Apple could buy the puny Tivo ($350M market cap) with the loose change in Steve Jobs' couch.
• Conventional wisdom suggests that once Apple takes a breather from releasing new versions of the iPod, it will set its sights on conquering the video downloading market
• Tivo is in deep doo-doo and eager to sell, as evidenced by the recent resignations of CEO Mike Ramsey and President Marty Yudkowitz
• A pioneer in the personal video recorder (PVR) industry, Tivo's brand name is synonymous with PVR technology; in fact, Tivo is now a verb (as in 'I'll Tivo it') even for viewers that use competing technologies.

Here's why it won't happen:

• Rumors of a Tivo acquisition seem to rise with every new moon.  Previous 'acquirers' included Time Warner (TWX), Comcast (CMCSA), Sony (SNE) and Liberty Media (L); plus there were rumors of a merger with Netflix (NFLX).
• Tivo's technology has become a commoditized; numerous competitors, such as Motorola (MOT) and NDS (NNDS) make similar products
• While Tivo may have a strong brand, Apple's brand name is considered the most recognizable in the world.
• Tivo's most likely suitor, DirecTV (where nearly 75% of Tivo boxes are installed), recently dropped Tivo's technology in favor of NDS's XTV product, making Tivo's already uncertain future even less certain.