Sirius-XM Euphoria Fading

Shares in both XM and Sirius regularly trade heavily, and with investors placing bets on the merger's prospects for regulatory approval, Tuesday's action should be frenetic.

Investors may be eager to see the companies combine, in hopes that a merger will create a more efficient player less apt to burn through mountains of cash. Karmazin said in Monday's press release that the deal is "the next logical step in the evolution of audio entertainment."

But regulatory hurdles remain and it's not clear how Sirius investors will view the prospect of the company issuing more than a billion shares in the name of acquiring a struggling competitor. In addition, both companies have shown signs in recent months of a pronounced slowdown in their once-red-hot growth -- raising the question of what investors will expect out of a merged XM-Sirius combination and whether the company can deliver.

Shareholders have grown weary of financing Sirius' and XM's ever-growing needs for cash, particularly with rivals to satellite radio sprouting at every turn. The past year was marked by consumers' embrace of the Apple (AAPL Quote) iPod, and now cell-phone companies are trying to grab market share with music phones of their own. Whether a combined Sirius-XM would be better equipped to advance technologically will be an important question for investors to weigh.

Karmazin and XM Chairman Gary Parsons, who is to be chairman of the combined company, will brief analysts and investors at 8:30 a.m. EST Tuesday.