The agreement is not final: More companies could bid for the unit in an auction early next year. Nortel has already sold a number of other business units over the summer.

Once the sale of this unit, called carrier VoIP and application solutions, is complete, Nortel will be left with only a few holdings, including a unit that sells so-called multi-service switches, which direct traffic along communications networks. It also still owns the majority stake in the LG-Nortel joint venture, which has sold wireless telcommunications equipment to carriers in South Korea. And Nortel still owns as much as $2 billion worth of patents, which it might hold on to or sell separately. I suspect that Nortel will finish selling its assets in the first half of 2010.

Essentially, all of Nortel is up for sale. If all these sales go through, as expected, Nortel will be no more. Until now Nortel's execs have claimed that they will only sell a few divisions, and Nortel will emerge out of bankruptcy phoenix-like.

But industry insiders have long doubted viability of this scenario. It takes scale to compete against giants like Alcatel-Lucent and Ericsson in telecom equipment nowadays. And with every business sale, Nortel is losing its scale. At some point, it simply makes sense to liquidate the company than to try to be a minor player in a market where giants get all the customer wins.