Hewlett-Packard Co. (HPQ) Chief Executive Mark Hurd said his company is benefiting from a faster-than-planned integration of services giant EDS, even though the personal computer maker offered revenue guidance that missed Wall Street expectations.

Hurd, speaking at the Palo Alto, Calif.-based company's analyst day, said the $13.9 acquisition had fundamentally altered the company, making services its biggest segment. Hurd said the unit, which it bought in May 2008, was already helping it with a key objective: selling more of its own products to corporate customers.

"Services is a very, very strategic business for us," Hurd said. "As good as I felt about this a year ago, I feel better about it today."

Buoyed by its growing services business, H-P is positioned to grow faster than the overall technology market, Hurd said. The company sees the total market for services business growing to as much as $600 billion by 2012.

"H-P's best days are ahead of it, not behind it," Hurd said.

Hurd's optimistic comments mark a departure from more tempered remarks earlier in the year. They also came as the company offered a typically cautious forecast for its performance in the coming year.

For the fiscal year ending in October 2010, the world's largest personal-computer maker said it expects per-share earnings excluding items of $4.20 to $4.30 on revenue of $117 billion to $118 billion. Analysts, on average, were expecting earnings of $4.25 a share on revenue of $118.04 billion, according to a poll by Thomson Reuters.

Using generally accepted accounting principles, the company said it expects per-share earnings of between $3.60 and $3.70 in fiscal 2010.

Kaufman Bros. analyst Shaw Wu described the guidance as "conservative." He said it would help H-P top expectations should the market grow faster than expected.

H-P's shares, up 29% in 2009 but flat over the past 12 months, slid 1.2% in after-hours trading to $46.87.

Hurd cautioned analysts that H-P's performance would be driven in large part by the overall tech market, which is starting to show some signs of life, and that the company would grow more quickly than the market "if in fact that growth presents itself."

Chief Financial Officer Cathie Lesjak said that "getting the cost structure right" for EDS was a priority. She said the company still plans to eliminate another 9,000 or so jobs as a result of the merger.

Since the EDS acquisition, H-P has conducted 15,000 services-related transactions, according to material the company presented. That included 32 new contracts he called "mega deals," or valued at more than $100 million, including one with American Express Co. (AXP).

Hurd also expressed confidence the company can continue to work with partner Oracle Corp. (ORCL), even though the company's recent acquisition of Sun Microsystems Inc. (JAVA) means H-P will compete more with the company. Hurd said he was "very comfortable" with the deal.

Like other high-tech companies, H-P has struggled with a recession that's crimped consumer and business spending on electronics. The firm has used cost-cutting - one of Hurd's managerial specialties - and EDS's high margins to offset falling revenues. Still, the company reported a 19% drop in profit in its fiscal third quarter as sharply lower sales weighed on its performance.

Hurd's comments come amid recent developments suggesting sales of computers and servers - which constitute about 44% of H-P's revenue -- are beginning to stabilize.

On Wednesday, market-research firm Gartner Inc. said it expects personal computer shipments to drop 2% from 2008. That's better than the 6% contraction it had previously seen.

Also this week, Intel Corp. (INTC) Chief Executive Paul Otellini said he expected PC unit sales for the year will end their declines and be "flat to slightly" up.

As for servers, which are giant computers used in business IT infrastructure, IDC Corp., another data tracker, has forecast server sales will stabilize in the second half of the year as businesses start to upgrade aging business IT. In the second quarter, IDC reported worldwide server revenue fell 30.1% to $9.8 billion.

-By Ben Charny, Dow Jones Newswires; 415-765-8230; ben.charny@dowjones.com