Nortel is in advanced negotiations to sell off most of its assets but it appears that the insolvent company will not be able to fully repay creditors. Nortel says the deal to sell its wireless assets to Nokia Siemens Networks for $650m will expedite the sale of the rest of the company, after hitting numerous delays while in creditor protection.

At the same time, the company said it continues to look to the Canadian government for assistance in winding down its operations. "Many suitors have been knocking at our doors," said Samih Elhage, the senior executive for Nortel in Ottawa. "This process is not an easy decision for all of us at Nortel. It's not an easy decision by which we are seeing Nortel, as an icon in the industry, end up where we are at this point in time. But at the same time, we have to recognize the realities that we are in."

Nortel is close to making a deal to sell its enterprise unit, which makes network equipment for businesses and other organizations, for about $500m. The favoured bidder is Avaya. Siemens Enterprise Communications could emerge as the buyer if Avaya pulls out. Nortel's metro Ethernet networks unit, which makes gear for carrying video and Internet data within cities, has drawn interest from nine companies. As business terms are finalized, the selling price has remained stable over the past couple of months at about $750m.

If the company is able to close deals raising approximately $2bn for the three units, it will still face a shortfall of several billion dollars. At the end of March, Nortel reported liabilities of $11.7bn and assets of only $8.1bn. Last week, Export Development Canada said it will provide $300m toward a credit facility for Nokia Siemens's purchase of Nortel's wireless assets, in return for preserving some jobs in Canada. While the Finnish-based company's promise to preserve Canadian jobs won it EDC's financial support, publicly there is no detail on how long those jobs must be kept, or whether Nokia Siemens is required to invest a minimum amount in local R&D.

Industry observer and IT Europa Editorial Director, John Chapman, commented: "Nortel's demise has come about from years of not focusing on their core business models nor protecting their strategic positions in their key markets. Nortel has always been a leader in technology terms in the telecoms and networking markets. Their products have usually been at the leading edge and always feature rich, however their customers and channel partners regularly were frustrated by Nortel's inability to understand the need for solid business models.

"Having the greatest products does not guarantee success, particularly in a market that changes as fast as IT. Having solid channels and business models to underpin the delivery of the products is the important essential for a fast moving business.

"Nortel's charge for growth was never matched by their understanding of the broader market. Their channel partners over the years have been continually frustrated by regular switching between carrier and enterprise focus as Nortel chased the latest market opportunity. There have been many occasions over the years where Nortel had products way ahead of their competitors but failed to capitalise on their advantage through lack of focus.

"The frustration of channel partners led many to change allegiance to companies like Cisco, who though not always as advanced technologically as Nortel, had a much better channel model and a clearer strategy.

"Having not built a strong and resilient business model and by relying on their 'charisma' and technology lead, meant that when Nortel overstretched themselves, by funding their own deals in the telecoms service provider market, they had no foundation on which to steady the company and restart the business.

"They have been floundering around now for months trying to find a way out but have eventually had to 'throw in the towel' and sell off the different divisions. A sad end to a company who had something special and blew it."