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Nortel is in talks to sell off its two main business units, mobile infrastructure and enterprise systems, and break up the company rather than seek to emerge from bankruptcy protection as a smaller but intact entity. Although potential buyers are likely to spin out the talks in search of a bargain, The Wall Street Journal reports that Nortel has received more interest than expected in the two units, whose combined sales are US$6.7bn.

"What we are finding is that there may be a lot more value by selling rather than emerging [from bankruptcy]," a source told the WSJ. Nokia Siemens is top of the pundits' list of favourites to buy the wireless business, since it needs to strengthen its north American revenues and Nortel is an incumbent supplier at Verizon Wireless, Sprint Nextel and several Canadian players. It has strong LTE developments and is taking part in trials with various operators round the world - many believe it would have won a share of the Verizon LTE deal had it not been for its financial instability, which would give the more solid NSN high hopes of future LTE wins.

Possible candidates for the enterprise unit are Avaya and Siemens Enterprise Communications, a joint venture of Siemens and private equity group Gores.

Last week, CEO Mike Zafirovski was still saying that Nortel hoped to complete its ongoing restructuring and emerge from bankruptcy protection before mid-year as "a leaner and more competitive company", but largely intact. However, under bankruptcy law, Nortel must seek the most value for its creditors, which could mean breaking up the company if buyers are found - even though the loss of the main cash cow, wireless, would leave the rump of the business in a precarious position.

Nortel's board is expected to meet next week to discuss the company's plans.

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