Alvarion, the maker of wireless broadband technology, appears to be breaking up, say sources in the capital markets. Meanwhile, back-to-back reports say the company has agreed to sell its WiMax unit and to sell a 40% stake in itself to a private equity fund.

It was reported yesterday that the company's money-losing WiMax unit will be sold to an unidentified Indian company. And last week TheMarker reported that Fortissimo Capital was said to be interested in acquiring a 40% stake in Alvarion for $15 million.

Neither sale is final, with negotiations over terms still under way, but sources say that the prospective WiMax sale was one of the reasons that Eran Gorev stepped down as CEO three months ago in favor of Hezi Lapid.

Shares of Alvarion jumped more than 7% in Tel Aviv Stock Exchange trading yesterday to close at NIS 1.73.

The company has struggled to cut costs in the last three years, amid losses of $146 million - a painful process that has included firing hundreds of employees. But it was quick to deny anything about a breakup and said it was focused on its two growth engines.

One of those engines is the company's Wi-Fi unit, Wavion, which Alvarion purchased last November for $30 million and provides the company with a solution for mobile carriers sending data over the Internet.

Yesterday Alvarion reported more good news from the unit, saying it won a contract with a local partner, G-Net, to supply wireless Internet to rural and urban areas in the Republic of Georgia via 600 base stations.

In mid-June, Alvarion won a second order for wireless Internet solutions in Uruguay, and a month before that another contract from the Philippines. Each of these contracts is worth a figure in the single-digit millions.

The second growth engine is in distributed antenna systems - small antennas, known as DAS, that provide quality wireless reception in enclosed areas. Alvarion entered the segment just over a year ago when it bought the Israeli company Clariton for $4 million. Since then it has developed a line of products under the name BreezeCELL, unveiled at the G4 exhibition in Chicago last October.

Despite positive developments in these two divisions, Alvarion's Achilles' heel remains its WiMax business. WiMax is used for medium-distance wireless communications and was supposed to be a next-generation improvement - a 3G-plus technology - over widely used Wi-Fi. But WiMax was leapfrogged by a fourth-generation technology developed by the Korean telecoms company LTE, which has proved much more popular than WiMax with mobile operators.

The WiMax division has saddled Alvarion with heavy losses even as it contributes a large share of the company's revenues. WiMax is sold mainly in Africa, India and Latin America - places where landline infrastructure is still lacking. That explains the Indian company's interest in getting hold of the technology.