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Good morning. My name is Birger Steen, and last December I was elected Chair of Nordic Semiconductor. I wanted to take this opportunity to introduce myself to you and to introduce some work that we've been doing between the board, the management, since then.First of all, I've also had the opportunity to spend quite a bit more time with the company. I've been with the -- on the board since the spring of 2017. But the last 6 weeks, I've spent time both in Oulu in Finland, which is an impressive place in many ways, Trondheim in Oslo and also had the opportunity to spend the week with the Nordic team in Las Vegas. And that's going to rank high on my highlights of 2019 personally because these guys are like rock stars on that floor. If you're from Nordic, you're welcome absolutely everywhere and everybody comes by your stand. So I see a few faces who were also there and they can probably testify to this.But one in particular since I joined the board back in 2017 and particularly these last 6 weeks, it's become clear to me that many of our shareholders have opinions on our investor relations work. We have more than 3,000 shareholders, so that's probably natural, it's no surprise that you guys have different perspectives and different needs.Anyway, in phone calls and meetings and with the help of some qualified third parties, we spent some time listening and taking notes in this last -- these last few weeks. Then we sat down as board and management to think through how we could serve you in a better way. The net result of this is our revised investor relations policy, which you will shortly find on our website. You'll see a key theme, it's our ambition to provide all shareholders with equal and timely access to share price relevance and fact-based information. We aim to produce a generally tighter information flow, timely, accessible and widely shared. We will focus on announcements, press releases, Capital Market days and roadshows on both sides of the Atlantic, as we reenergize our marketing efforts to international semiconductor investors. We made some changes to our forward-looking guidance principles, effective today, as you'll seen in a moment, with an emphasis on key figures for the current quarter and medium-term revenue growth aspirations. We're doing this to align with market practice but also in light of high uncertainty and low visibility in our markets. And by the way, this is a situation we do not anticipate will change in the foreseeable future.If you look across comparable companies internationally and now just most recently, probably the company with the best insight in the whole world, into the world economy, Amazon, you'll find a similar approach to forward guiding. We're also rebuilding our investor relations team with top-notch people, and Svenn-Tore will provide more detail on this in a moment. And that's really it in a nutshell, and you can read more about the details on our website shortly.In my opinion, Nordic Semiconductor has a strong platform for future profitable growth, and I hope to contribute to the company's development in my role as board chair. Going forward, I hope the board of the company would be less visible rather than more and less of a factor in investor relations work than it has been in the recent past. This company has products, customers and full-time employed people who really speak for themselves. So in that spirit, I'll leave the stage to our CEO, Svenn-Tore Larsen, who will present the first quarter results, as usual, together with CFO, Pål Elstad. Thank you.
Thank you, Birger. So we do as usual. I would do the business update, Pål will do the financials and I come back and do the business outlook.Q4 highlights. It was a -- we continue to strengthen our market position in Bluetooth low energy. But maybe the most important thing is, yes, we get 133 new designs in Q4, design-win registration. But the difference from previously is that we've also had high rank Tier 1 customers among these with opportunity to higher volume going forward. We had the successful production launch of our cellular IoT product and we received industry awards. For the second year, we won the GSA Award. Global Semiconductor Association is association of all semiconductor companies that are voting for their favorite within the different categories. And we've won the European category this year as last year.If you look at numbers, we saw a solid proprietary revenue. And that was mainly due to accelerated shipments out of China prior to the new tariffs. So you saw some of our customer produced and want to ship it out ahead of tariffs into the U.S. It was a challenging market in China due to these expected trade tensions, and we got a disappointed revenue compared to what we had planned for. I mean, we are not happy with $61.1 million. But it was a tough situation for all semiconductor companies during Q4 '18.So as I said, USD 61.1 million, it's a decrease of 5%, again far away from our target when we entered into this year. It's as I said impacted by trade tensions and following low demand in China. When people are getting cautious and we have lines of cautiousness, it really affects the first supplier, and that's Nordic as related to our market.Proprietary was only down 4%. When we started the year, we expected a decline of 5% to 10%. It's been keeping up, which is a positive sign for one of the bricks in our revenue. And we did promise revenue for our cellular modems. And so we delivered, we got $232k invoiced during the quarter.Our backlog is solid going out of Q4. It's up 30.4% year-on-year. What we've seen though is that some of this revenue has been pushed into Q2. That's why we are cautious when we do guiding for Q1 '19.I'll now talk about all the decline, but if you look, we had a growth of 23.3% year-on-year in Bluetooth, so we continue to grow. And that's more or less what we recall, at least, we aim for having also as over short, medium-term goal of growth in Bluetooth.The bright spot is that we started to get paid for our efforts on supply chain, and we got a gross margin of 51%. It's up 3.4% year-on-year. We had an EBITDA of 2.1. And if you look at short range EBITDA, it was 7 million or 11.5% EBITDA margin. It cost to the investment we are doing in Finland, which is going to pay back.If you look at our product life cycle, and this is in short range, you will see the steep rise of Bluetooth. Well, I just wanted talk a little bit about the time it took from our first release of a Bluetooth chip till we got revenue. It was 5 to 6 quarters. When did we release the cellular IoT product? 12th of December, and we got revenue in the same quarter. It really tells that the statement I made on the first slide that we are a recognized semiconductor vendor really also spread outside competitors. It's customer that are buying our product, and they buy it the same quarter as we release the product. Actually, when it comes to the cellular modems, we shipped 360 development kit before we release the official production.And we are pretty confident on a solid growth in Bluetooth. Why? Because we know the Tier 1 customer are entering the market with products with Nordic inside. So we will expect growth between 20% and 30% going forward. And we said last year that we think there would be a decline in Proprietary of around 10%. We've been a little bit more modest this year. And we say maybe 10% to flat. So the base is and -- for Nordic to grow has never been stronger than today. If you see here, the life cycle here is on 2 products. We're going to add another product on top of these 2. And if you look at that product, it have an ASP that is 10 to 15x the existing Bluetooth ASP.So by this, I leave it over to Pål.
Thank you, Svenn-Tore. I'll now run through the financials for Nordic. In Q4, as normal, these numbers are the reported numbers. They exclude capitalization of intangibles and equity compensation, which we will come back later on when we talk about the cash OpEx.As we see, we had the disappointing revenue in Q1 -- Q4, sorry, with minus 5% versus last year. Of course, as we've communicated earlier, our fixed cost base continues to increase, so we will get a negative effect on our operating leverage in this quarter, which we'll -- I'll go -- run through more in more detail more.However, as Svenn-Tore just mentioned, we do see positive effects on our variable cost base. Our variable costs, the gross margin has improved significantly compared to last year. We had a 3.4 percentage point increase from the same period in 2017.Total OpEx in the quarter is 47.7% of revenue, up from 41.3% a year ago. However, compared to Q3, which is the highest revenue quarter, our OpEx in the percentage of revenue in that quarter was 32%. Increase from Q3 is, of course, lower revenue. However, we also have, as normal, a higher activity in Q4 versus Q3 both in relation to activity in sales, activity in exhibitions, but also the fact of holiday pay in the third quarter of the year. The underlying or the reported number in cost has gone from $25.3 million to $29 million in 2018.A few comments I'd like to make. One of the biggest cost increases have happened in the cellular IoT business. The reported number for cellular IoT is $5 million. This has increased to -- without capitalization to $7.5 million, up from $6.1 million a year ago.Also, SG&A. SG&A has gone from $10 million a year ago to $11 million this year. The investment in SG&A comes as an effect of the focus we have on introducing the cellular product into the market that will happen in 2019. On the EBITDA margin, 3.4% versus 6.2% a year ago.As our cost base is fixed, of course, we get a negative effect, as I mentioned, on -- when the revenue goes down. So I also want to highlight 2018 full year operating model performance. We did have a 15% growth in revenue this year, including a Bluetooth growth of 23.3%. So with -- which is within our medium-term ambitions. However, as I also said before, gross margins, a very good improvement in the beginning of 2018. We said that we were going to have one quarter of above 50%.When you look at the year as a full, we actually almost manage to get 50% for the year as a total. So we're very happy with the development within our cost base on production.Total OpEx at 38% versus 37% for 2017. OpEx going from $87 million to $103 million. Although higher OpEx, our revenue growth combined with improved gross margins have driven EBITDA margin improvement of 1% from 10% in 2017 to 11% in 2018.I'm now going to briefly go through the revenue per market. Of course, when we have a 5% decline in revenue year-over-year and a 22% decline quarter-over-quarter, it will be negative in most areas. First of all, Consumer Electronics and Wearables is the 2 markets that are most impacted by the trade tensions that Svenn-Tore mentioned and the low demand in China. The reason for that this is that within Consumer Electronics and Wearables, it's where most of our customers are ODMs in China, which see the lower demand.2 areas with very positive development is Healthcare and Others. Healthcare is one of our key target markets in 2017 that was slightly low to new products released. But in 2018, we've seen a very good drive on these new products. In Others is the module business that also has shown very strong numbers throughout the year.Building and Retail, of course, the worst area with a 37% decline. However, if you adjust for the 2 applications we discussed in the Q3 presentation, Building and Retail shows a pretty good growth rate. For the next 2019, we will, of course, add our cellular IoT products into these market categories.Gross margin. We had a strong gross margin expansion of 3.4% versus last year. This comes as an effect of the continuous improvements on costs and yield on our products. Actually, we now see the highest gross margin since Q1 2015, and Q1 2015 is really when we released nRF52 and we started to have lower yield. But all that is now improved during this time frame.Compared to last quarter, we have a 0.2 percentage point improvement driven by underlying cost improvements again but also favorable impact of ASIC revenues, which have a good gross margin and volume bonuses received in Q4. It's also important to highlight that we do have quarter-to-quarter fluctuations and they should be anticipated also in 2019.I will now turn to the cash OpEx. Cash OpEx is what we have as an underlying cash cost where we exclude the effects of capitalization. In Q4, we have capitalized $3 million, of which $2.5 million relates to the cellular IoT investment. So the reason the highest amount is there is, of course, that's the product that's running into the [ cap ] commercialization phase. And whilst in Bluetooth we have more products further down the pipeline.As previously communicated, our cash OpEx has been increasing. However, from last year, the increase is now 10%, which is slightly lower than we've seen in historical quarters. This increase in cash costs comes mainly as an effect of higher headcount. We have increased headcount by 14% from 601 last year to 685 this year. This increase comes as a broad basis, both in R&D, mainly cellular IoT, but also in the sales and supply chain to fuel the future of growth.We do target to have continued cost discipline during the quarters, and cash OpEx should follow the operating model that we have discussed earlier.We would like to focus and show the profitability of our short-range business. Our short-range business, which is the Bluetooth and the Proprietary, including ASIC, actually showed a strong 15% growth year-over-year. And this growth business, coupled with improved gross margins, we have been able to improve our underlying EBITDA by 10% from $43 million a year ago to $47 million -- or close to $48 million in 2018. Due to the higher cost base, the EBITDA margin is slightly down from 18.4% to 17.6%. However, we are happy that we're able to keep the relatively high EBITDA margins in the short-range business.My final slide is on cash flow. We did have a very strong cash conversion in the quarter. The total cash flow was a positive $9 million. However, if you look at the underlying operational cash flow, this was $26.5 million. The strong cash flow is seasonal effect. We always see improvements in cash flow during Q4. However, this was stronger than we have seen in the previous period. The main reason for this is that we've been able to reduce our net working capital substantially from 32.1% of last 12 months' revenue to 22.6% this quarter. So we continuously have a focus on reducing our internal inventory and also keeping good control of our customers.In addition, we had a CapEx of $5.4 million in Q4. As we mentioned earlier during the capital increase in April, we are investing in test equipment to speed up the certification process and also yield -- analyzing yield, et cetera, for new products coming into the market. This is very important when we're selling to the more complex customers [ who are doing ] today.We have purchased treasury shares for $12.1 million this quarter, 2.8 million shares. When we did raise capital in April, we sort of announced that the use of proceeds of this share capital increase was threefold. First of all, it was to invest in working capital when we -- we will start, commence on our cellular business. Secondly, we will invest in lab equipment to speed up the testing processes. And finally, we do want to show a strong balance sheet to our Tier 1 customers. In light of this, we have decided to stick to this use of proceeds that we announced, and we've terminated the share buyback program as of today.For the year as a total, we have a breakeven cash flow adjusting for the financing activities we did in the second quarter of the year. Svenn-Tore, I'm now going to let you do the business outlook.
So we've been announcing a couple of design wins on cellular modem earlier. But this time we add a new product. It's a beverage machine, the slush machine. And the design, the 91 parts in there, to do maintenance and reactive maintenance. And during CES this year, we got a lot of customers doing the same. We got the guys that order popcorn machines around the U.S., we have guys doing soft ice around the U.S., want to implement something similar. So we see high activity in a segment that we actually predicted a year ago, and this is talked about active maintenance.We also see that we continue to win smart tags for asset tracking, healthcare life monitors. Again, new wins. In the middle you see a product from ABB. It's a bearing, and they have a sensor and Bluetooth low energy communicating with a hub. You're going to see quite a bit of these sensors collecting information from industry applications going forward.The sales team have also worked with a couple of companies doing electronic shelf labels. This space has mainly been driven by IR, infrared light. Now we see companies moving to pretty low energy, good volume opportunities.We have this chart from analyst showing that Nordic is back on track with close to 45% market share on design wins that are registered at Bluetooth SIG. It's exciting to see us back where we belong as the leader, absolute leader. But I think another thing to look here, a comment we got in Q3 is this red bar with Others. And this Others contain around 20, 22 different semiconductor companies that have 1 to 3 design each. Usually they are in the low-end BLE products. But you see these guys had a relatively sharp decline in Q4, and we don't think you can maintain the specification with all the functions and features that are required for Bluetooth low energy with 1 to 2 designs. It requires more revenue to be able to be the leader of BLE. And I think this chart shows that Nordic is there, 8% year-on-year, 10% growth quarter-on-quarter.We also believe that shipping kits is the right way to get attention with customers. Easy-to-use kit, we have showed on the demo on the 12th how easy it is to get our cellular IoT kit up and running. And everybody that's been working with Nordic know how easy it is to get the BLE kit up and running.When we shipped close to 66,000 kits last year, it's at 33% growth for the second half, 39% growth for the full year. This shows that the market for BLE is growing and it also shows that our position is strong in this growing market. So kit shipments, we're proud of. We're also proud of how we keep up with development in BLE and Bluetooth SIG. Bluetooth 5.1, which is the latest specification of Bluetooth, contain something called Direction Finding. Nordic has implemented Direction Finding from our chip, which is called 52811 and it will be on all subsequent devices out of Nordic.We do have some exciting applications already today with all the parts where we have Proprietary Direction Findings, which I will come back to on a later stage. So we -- to be able to lead in a technology sector, you need to ensure that you have the new additional feature timely out to the market with that.So our new segment, Cellular IoT, is going to be the next driver for Nordic. And it won't take 5 to 6 quarters before we continue seeing revenue. If you look at the left side here, this is the first projections from external analyst ABI Research. It's 2 weeks old. It shows what I expect from the market from '19 to 2023. If these numbers are correct, it really shows that the statement we've given to the market that we should be break even in 2020 implies that we need to take less than 10% of market share. That's not a traditional Nordic approach. We aim for more.2020 is not that long out. If you look to 2023, we are close to 700 million units as I expect to be shipping into the market. And this is LTE Narrowband IoT and M only. We're not talking about LTE, generally. These are the 2 standards Nordic delivers.So I know there is guys here that are really sharp with the calculators. If you take close to 700 million units and multiply by 10, 15, we can see that this market is significant larger than the BLE market. And if you then think we have a modem that is suited for most of these verticals that will apply Narrowband IoT, LTE-M, we have market-leading power consumption, and we have a community of designers out there that are familiar with Nordic development tools.I think it's important for you guys to understand when as a designer you should start a project, you have extreme pressure on time to market. If you start in a development environment [ very familiar ], you can become the star of the company, especially if you use the component that has the lowest power consumption and has the best specifications. We are extremely proud of the team in Finland. I'm particularly proud of how the sales organization, how our partners been rolling out their LTE shipment. We all have exciting trip ahead of us.So I hear from people occasionally, Nordic is not well-known around the world. I would like to stop that here and now. This is one of the broad-leading catalog distributor shipping worldwide. One morning, guy got this letter into his e-mail, e-mail box. It says, "[indiscernible] congratulate us to the tremendous interest in our products." 9160, the cellular modem design kit, the product was ranked #2 and #4 in views on the web page among 97,000 new part that they have stocked the last 6 months. This is incredibly good, and we are proud of that. But read further, we also had the 52840 Dongle up there. It was ranked #5. 3 products from Nordic among the top 5 products. I'm proud and impressed. And so are David Stein, the Vice President of Global Supply Management at Digi-Key.So still want to discuss that we are well-known around the market? We got award from the Global [ SDSA ], biggest such kind of feedback from leading distributor. I'm sorry, I'm not accepting that Nordic is not well-known in the market. We are known as the connectivity leader. We also see now that we have created a leading product that generate interest at engineering desk globally with 91 family.And we had an impressive launch of the 9160. We now get certifications in place. We got the global certification program, which covers more than 100 operators. We are working on 10 major operators lined up for network-specific approval programs. Some of them will already be in place, the first half 2019.We are starting to ship development kits and samples to redistributions. You know how they were shipping LTE and cellular modems before. Our competitors had FIEs going out to customers, [ sitting ] with them for weeks because it was so complex. Our Finnish guys have made this ease-of-use, which is the Nordic mantra. Anyone that has a little bit of knowledge of electronics can hook these kits on the net. I'll come back to that as a proof of that.I remember when we launched the product, 12th of December. Between 12th of December and 1st of January, there is a holiday. Despite that holiday, we shipped 2,000 development kits out of Nordic. And customers are now building prototype across a range of verticals. It's not only slush machines, it's not only popcorn machines. It's absolutely other areas, too.I don't know if you saw this, was released yesterday. Nordic facilitates Telenor LTE deployment. It's Ove Fredheim, Head of Telenor business. He says in the press release, Nordic's dual-mode LTE technology fits perfectly with new networks. What did I say? I used the word easy. Ease-of-use, what does Telenor say? Making it easy for more people to take use of IoT on 4G. The operators really need IoT to sort of takeoff. And they have the vehicle to do it. They're going -- Telenor is going to sell the 9160 development kit in their own web shop. [indiscernible] can buy one. [indiscernible] can buy one. And you can put some power supply on and suddenly you are connected to the cloud.Before we go there actually, there was -- what's happening? So there was also another major operator out with a press yesterday and Nordic was mentioned as one of the partners. So Telenor is not the only one. So it's significant movement in the space, and Nordic is the pendant that operators are putting 4G and 5G and Narrowband IoT on the base station, and this happens as we speak.So now I'm over to guidance. I've been talking a lot about good things going to happen in Nordic. And I'm showing a not very good guidance on the numbers for next quarter. This is very much in line with what we see from other semiconductor companies that have been guiding for the first quarter. We think we are ahead of an uncertain quarter, and we are expressing this through our guidance on the revenue. But this is a temporary thing. We don't know if it's going to be Q2, Q3 or whenever we're going to see this tension or if it's going to get relaxed tomorrow. Nobody knows. And that's why we are cautious in our first quarter guidance. But we're sure that we have projects to drive excellent revenue in time to come.We are continue focusing on cost improvements. So we expect to keep the 50% margin. We, as Pål said, raised capital to invest in lab equipment. Two reasons: one is to comply to Tier 1 customers' requirement. As we're getting more of the Tier 1 customers, you need to fulfill their expectations and Nordic is doing that. We also want to accelerate the -- our process to get approved for networks. So we have bought the same test equipment that operators use when they test Nordic against their own network. We don't want any surprises when our modules get into our operator's test labs. It obviously costs, and we expect a CapEx of around $7 million, $8 million in Q1. And we do it because we expect to see result of this not only in margin improvement but in revenue in quarters to come after the Q1 quarter.A final comment I will make is that next quarter you all will meet our new Director of IR, [indiscernible] will move back from Hong Kong and participate in Q1 presentations and roadshow. For those that -- there is some few ones, maybe not in Norway, but we meet in actually on the roadshow we have next week. So he will be active from now and will be a leading part of the presentation in Q1.Then we open for questions. Pål?
It's Christoffer here from DNB markets. I was wondering if you can start with I guess you don't know what will happen in Q2 and Q3. But could you share some thoughts on what will need to happen for this situation to normalize? What are your clients telling you that they need to see before this will normalize, the situation?
There is two thing related -- we have to take it related to Nordic. One thing that's for sure is that we will get new customer. So even if the situation is not normalizing, we will grow our revenue because this customer will get into volume production in the second half.If we get a situation where the trade tension basically disappears, we will get double wave because then we will get existing Chinese customers back on track. We have accumulated quite a bit of design wins, as you know, and they will move to production.
Yes. I guess even though there are these trade tensions, but we still need the same amount of Wearables or keyboards and mice and stuff like that, so how long will kind of the end customers, the Western companies that use these manufacturers in Asia, how long are they able to wait before they have to move production out of China or do other initiatives that fixes the problem?
I think that's very individual of the power of each customer. We see some of the leading customers are exploring opportunities in countries like Thailand or Vietnam. But that's nothing that Nordic can comment on or have an opinion. We can just watch and convey our view.
Two more. The first one, you take down the long-term or medium-term target for related growth from around 30% to 40% to 20% to 30%. Could you just share some thoughts on what's the main driver behind that significantly lower growth? And then secondly, on medium-term growth margin and CapEx targets, is this a temporary higher CapEx? And gross margin, is it long -- medium term 50%?
I'll take the first part of your question and Pål can take the second. The first part is basically that we said this is a mid-term -- medium-term target and that's because we have the tensions ahead of us. We would like to comment when situation change, but we can't comment before we see real proof of changes. But we think with 20% to 30%, we are in the range where we have -- able to fulfill that guidance.
With the tension still going on?
Not for Q1. For Q1 basically, but we see mid-term. If we had that in Q1, then number -- guidance wouldn't be 50% to 55%. But we have to lift our view about Q1. Q1 is unfortunately what it looks to be. But it will not continue in the same pace as we add on new design wins. And there will still be production of product. There will still be consume of products globally. It doesn't stop.
For gross margins, I think we have communicated previously that our long-term target there is 50% on the short-range business. It's important to remember it is the short-range business. On the cellular business, which where we sell systems and packages and modules, our target is still for around 40-plus percentage gross margins. So then you'll have to calculate the corporate average when we start looking into the cellular IoT numbers. On CapEx, we do have a higher CapEx in Q1. I don't want to communicate further than that because, of course, our CapEx really depends on plans and targets and what we want to do and how the whole business develops. So that's the target for Q1. And then we'll see what happens for the rest of the year. But look at historical numbers and you'll get indication...
I mean, we have to adjust at market conditions.
Yes. Aksel from ABG. So a couple of questions. Firstly, you have a backlog of $70 million ending in the quarter. It is up over 30% year-on-year. And it paints a little bit different picture than the revenue, which is down. So could you comment a little bit on the backlog, sort of the duration on the backlog...
Thank you for your question. I mean, that's a very good question. And that shows the situation. Basically, yes, we have had orders. What you see is that orders are pushed out in time. The good thing is that they're still on the backlog.
And just follow-up criteria because I discussed with my colleague earlier and we wondered how long can an order be in the backlog before it's taken out of the backlog.
An order is never taken out of the backlog before it's canceled by the customer. And I don't have a magic number on how long that time is.
Yes. And if you could comment on sort of the duration on the backlog, how long does it stretch out in time for?
Yes. The -- I think the length of major part of our backlog is ending in Q2. So basically not longer than Q2.
Okay, so normal then?
Normal then.
And a question relating to the gross margin improvement, which has been very strong. So you cite a couple of different reasons, but would you say that it's primarily driven by supply chain improvements or primarily driven by favorable customer and product mix? Which is the key factor or is it 50-50?
I think basically supply chain has contributed mostly to this. The exact split I have not calculated on. But obviously, it's supply chain and improvement and investment with them based on the capital we raised earlier this year.
And when one has seen the gross margin improvement and will not see that in relation to the sort of unsatisfactory Bluetooth growth and perhaps a little bit stronger Proprietary sales, so another reason that you have stronger margins on the Proprietary side and that has been a sort of a key driver for the high gross margin. Is that correct reasoning?
No.
No. I think your gross margin is a little bit mixed. It's difficult to exact pinpoint if Proprietary is better than Bluetooth.
And a couple of final ones. So you saw headcount growth now in 2018 of 14%, and you continue to hire many new people, do you expect sort of a similar growth rate in terms of staff for 2019?
We have planned for growing support, especially for cellular modems and sales. And -- but it will not be in the same range, but also depend on market conditions. The important thing for us is that there is a limited pool of available really good guys in this industry. What we see lately is that some of these guys have start coming to Nordic. And if we can get capacities that can lift the total organization, we will always employ these guys.
And a quick final one, more short-term oriented. So on Q1 now, I would guess that it is quite difficult quarter to guide on, given that you do a lot of business in the end of the quarter. And in this quarter you have the Chinese New Year, also.
This week, yes.
Yes. Could you say you a little bit about sort of visibility that you have on the quarterly development so far and how much of the quarterly business is going to be done in March? And then how that could sort of change your outlook, better or worse?
I think the visibility is more or less the same as it is other quarters. So we do a lot of the business towards end of the quarter. It doesn't really matter that there's 1 week of holiday in between.
[indiscernible] Arctic. Can we -- could we quantify how much of your weaker sales was due to weaker end demand? And how much was due to cut in inventories from your distributors, approximately? Because [ dialogue here ], they claims that underlying Bluetooth smart growth is about 20%, also growing into Q4 and the cut in inventory by the distributors is a problem, given more...
Yes, we can comment a bit. Obviously, there is inventory adjustment when you see such a disappointing guidance for Q1. And -- but we also see that there is some new project coming in that will use different products from Nordic. So it means that the inventory situation needs to be dealt with. That's what we're doing. But the exact ratio on our products, it's hard for us to know because it's our end customer that has to give out information.
And -- yes, Q4 specific, on the Building and Retail segment, if you exclude share back, how much approximately is revenue year-over-year?
We haven't given that details. It's -- but we say that underlying we see good momentum in that business. And we've all talked about smart homes, retail solutions. Also, the city banks in other areas than in Asia is -- has a positive momentum. So overall, Building/Retail is an important market for Nordic.
We see a new segment within Building/Retail starting and that is lighting, smart lighting, which will contribute a bit in Q4, will continue to contribute in quarters ahead of us.
And on CapEx, can you give some more color on the mix on what you expect to be invested in Finland this year and what you expect to be invested in Bluetooth and how we should think about the CapEx number for the next few quarters.
So I think the way we invest is most of it is -- a lot of it is combined. So we're not buying a lot of equipment just for the long range. Most of it can be used for both long range and short range. So it's a good mix, yes.
I think we had to make a little bit [ more bands ]. Basically, all the component tester, we use the same test equipment. When it comes to network tester, it's specific for cellular IoT. And we've done most of the network test equipment already.
Andreas Bertheussen, Kepler Cheuvreux. Two questions, if I may. First of all, you mentioned there was sort of pull-in effect on Proprietary. Can we see a reversal of this going into Q1 in the guidance?
We didn't see the pull in request ahead of Q4. And I think we are very much in the same situation if there is a push out for Q1. We haven't seen that either. But we have inventory. We are prepared for a continuation of this if it happens.
Okay. And secondly, on this slush machine, popcorn machine-type segments, surprised to see that the economics can work out in terms of how much it would save on predictive maintenance versus the cost of the module and the subscription. Do you know any -- do you have any color on how these economics work? If you can really justify this type of chip put subscription on such a sort of small device?
Yes. Usually, these machines are maintained by persons going over there and sort of shaking and having some people employed to go around and shake these machines is relatively costly. So the companies that we met, say they will save significantly over time.
Okay. I think our time is over. Thank you.
Have a good day.