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Tuesday, March 1, 2011

CFO SPOTLIGHT – Ron Beeson, Magma Design Automation

Armanino released its 2011 CFO Evolution Benchmark Report. The survey was conducted during December 2010, with over 200 Bay Area CFOs and other finance executives participating, offering a regional perspective of finance organizations in the San Francisco Bay Area. The executives were asked about their roles and responsibilities, the strengths and weaknesses of their finance organizations, and their priorities and initiatives for 2011. Magma Design Automation participated in the survey and received a customized survey comparing their results to their peers for an in-depth look and evaluation of the results.

Magma, founded in 1997, provides electronic design automation software from its headquarters in San Jose. The company employs 680 people worldwide and earned $123.1 million in revenue for the 2010 fiscal year. Ron Beeson, Magma’s corporate controller for the past three years, said the firm is one of the four largest companies in the electronic design automation (EDA) tool industry.

Q. Your company received an up-close look from Armanino comparing your answers to the results of your peers. Did you find the process helpful?

A. Yes. It helped us from the standpoint of discovering what other firms are thinking about – especially around the forecasted trends and competitive issues involving staffing and employees. We saw where we fell within the survey ranges. We have found that pre-IPO companies are offering highly competitive salaries – particularly base salaries much higher than traditionally offered, just to get people to walk in the door. One example presented by Armanino was a VP of finance with a base salary over $200,000. That’s a salary not typically seen in smaller private or pre-IPO companies. But the truth is, how can you not afford to pay that? Even smaller organizations are waking up to the need to install infrastructure for growth early as the cost to catch up later is significant, not only financially, but in delayed achievement of critical path business objectives.

Q. What did you think of the survey?

A. It was valuable. It caught our attention last year, and we were interested in hearing what Armanino had to say. I’ve been working with Armanino for over five years now while working for several different companies.

Q. Were there any surprises in the comparison?

A. The competitive nature of the employment market was a bit of a surprise. I have stayed in touch with recruiters and folks who work in the employment market. I’m trying to stay on top of it so we avoid the situation of an underpaid employee who might hit me with news of their resignation because I did not recognize a competitive market situation. I need to be able to prepare and react to that before it becomes an issue or at least get ahead of it for planning purposes.

Q. Is there anything you might do differently as a result of the survey?

A. We were surprised that tech companies were anticipating as much growth as they were. It has been difficult for us to gauge exactly where the domestic and global market are, and where are they going. Are we stable? Are we still experiencing some downward pressure? What is happening in the semiconductor industry overall? There are still some negative stories, but there appears to be some stability taking hold. Generally, market leaders now seem to be back on the upswing.

Q. Has this information affected your outlook?

A. Yes. This survey is helpful in hearing where we are in our corner of the world. The EDA industry tends to recover from a downturn noticeably later than the rest of the semiconductor industry. The downturn impacted our business in mid-2008. However, our annual revenue trend did not turn back upward until this year, fiscal 2011.

Q. Are you one of the companies that plans to deploy your capital by hiring? And if not, how do you plan to spend your money?

A. My objective is to hire opportunistically. We have done quite a bit of outsourcing in the accounting department recently; maybe it’s time to bring some of those functions in house. That way we can save some money and gain leverage from multi-skilled employees. Also, it’s time we bring in the talent we need for the future. For a while we didn’t think about the future as much as maintaining regulatory compliance, accuracy and timing through the downturn with reduced staff. Now it’s time to rebuild talent.


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