Microsoft Corporation (NASDAQ:MSFT) released its latest earnings report last week, and overall, it was a solid report. Excluding results from the part of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) it bought, the company’s core results were in line with expectations.

Microsoft

Microsoft shows strength in cloud

In a report dated July 24, 2014, analyst Sid Parakh noted that Microsoft demonstrated that its cloud products are thriving. The company reported a 147% increase in commercial cloud products, including Office 365, Azure and Dynamics CRM, year over year. That’s a $4.4 billion annual revenue run rate. Microsoft also saw about a 27% sequential growth in Office 365 Home Premiums subscriptions, compared to a 30% quarter over quarter growth in the third quarter. Microsoft had 5.6 million subscriptions for the service.

According to Parakh, Microsoft Corporation (NASDAQ:MSFT)’s cloud offerings “appear to be resonating well with customers,” so he is still encouraged in this area over the long term.

Microsoft also shows strength in enterprise

The company posted a 12% increase in deferred revenue year over year, which moved to $25.2 billion. That’s compared to Wall Street estimates of $24.3 billion. Microsoft saw about a $2 billion increase in contracted-but-not billed balances, which rose to $24 billion. Commercial bookings saw a 23% year over year growth.

The analyst called the numbers “impressive within the context of what most large technology companies have characterized as a challenging IT spending environment.

Microsoft management updates their strategy

On Microsoft’s earnings call, CEO Satya Nadella also provided an update on where he wants to take the company next. He said the company will focus on being a “productivity and platform” company in a “mobile-first, cloud-first world.” He added that they want to go through the transition in a way that makes Microsoft more agile, increases accountability and watches finance. Last week the company also announced it would cut 18,000 positions and reduce the scope of the Xbox division to focus on gaming and the devices segment to de-emphasize feature phones.

Parakh increased his price target for Microsoft Corporation (NASDAQ:MSFT) from $44 to $46 per share but maintained his Hold rating on the company. He notes that a transition like the one the company is trying to execute is challenging because it requires a shift in culture. However, he said it could set Microsoft up well for the future. The reason he maintained his Hold rating is because the company’s current share price doesn’t leave much room for upside to his price target.