If the first cut is the deepest, what's the 21st feel like? For IBM (NYSE: IBM) investors, the cost cuts keep coming, but they always feel nice. The company released earnings on Monday and once again saw earnings shoot well ahead of a middling sales performance.

Revenues were up 5% year over year and flat if adjusting for currency, but net income per share saw a 16% surge. That kind of earnings boost through productivity gains is old hat for IBM, as the company has methodically increased operating margins from around 11% in 2004 to nearly 20% today through a focus on cost cuts, switching to high-margin areas of growth, and smart divestitures such as dropping out of the personal computer market.

So, aside from the never-ending cost-cutting that we're seeing from Big Blue, what did this quarter tell us about their business? For one, IBM's doing a good job of finding growth away from large enterprises which are still a bit tight on the purse strings. While IBM's largest industry by sales, financial services, saw revenue perform in line with the rest of the company, Big Blue received a significant boost from small and medium-sized clients. The company also highlighted a strong performance from growth markets, specifically BRIC countries, which saw a 14% year-to-year increase.

IBM's hardware-focused systems and technology group posted the largest revenue growth improvement from last year. Considering that researcher IDC pegged IBM as losing server market share to Hewlett-Packard (NYSE: HPQ) and Dell (Nasdaq: DELL), that might come as a surprise to some. However, the company has been targeting key areas that are driving growth at more attractive margins. For example, System X blades, a high-margin growth area, grew 55% year over year and took market share from competitors.

The software side also performed well, demonstrating how IBM continues to push margins in the face of a modest sales performance.

Finally, the weakest part of IBM's business was its outsourcing and consulting heavy segments. After the strong performance Infosys (Nasdaq: INFY) just posted, the results look comparatively weak. However, considering IBM's hardware-plus-software-plus services model, it's not surprising to see IBM lagging more service-heavy rivals, especially those with broader exposure to the BRIC growth areas, such as Infosys. Of course, IBM doesn't come with the same sky-high valuation multiple that outsourcers like Infosys, Wipro (NYSE: WIT), and even Cognizant Technology Solutions (Nasdaq: CTSH) currently sport.

So, it's business as usual at IBM. The company keeps trimming around the corners and increasing margins enough to keep earnings chugging along. While it'd be nice to see the top-line start inching forward a bit faster, the company is priced at only around 10.5 times forward earnings. Considering the breadth of services it offers, not even start-up hardware contender Oracle (Nasdaq: ORCL) will be displacing IBM as the single-stop solution for IT shops anytime soon. IBM's big, it's boring, and reliable. However, priced as it is today, it sure looks sexy.