What happened

Shares of NetScout Systems Inc. (NASDAQ:NTCT) were down 13% as of 12:30 p.m. EST Wednesday after the network performance management products specialist announced disappointing preliminary results.

More specifically, NetScout expects adjusted revenue for its (current) fiscal third quarter to be in the range of $270 million to $274 million, with adjusted net income per share of between $0.66 and $0.69. By contrast, Wall Street's consensus expectations predicted lower adjusted earnings of $0.64 per share on significantly higher revenue of $314.8 million.

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So what

NetScout CEO Anil Singhal reminded investors that the company was previously "optimistic" that it could offset an expected decline in spending by its largest tier-one service provider customer, primarily through modest increases in spending from other clients. But NetScout was unable to do so due to continued pressure on capital spending, longer sales cycles, and delays in funding from certain large federal government projects in North America. The company further expects its top line to remain under pressure into the fourth quarter.

Now what

To be fair, NetScout expects these headwinds to be temporary. In response, it plans to amend and expand its existing credit facility and execute an accelerated share repurchase of roughly 10% of its common shares outstanding.

As such, NetScout now expects full fiscal-year 2018 adjusted revenue in the range of $1 billion to $1.025 billion, compared to previous guidance for revenue to be flat from last year at roughly $1.2 billion. On the bottom line, that's expected to translate to full-year adjusted earnings per share $1.30 to $1.45, down from previous guidance for high single-digit to low double-digit growth over $1.92 per share last fiscal year.

In the end, it seems that NetScout's long-term story remains intact, so its ambitious repurchase plan could prove to be an astute move. But combine the uncertainty of these headwinds with a market that hates being effectively told to hurry up and wait, and it's no surprise to see the stock pulling back hard Wednesday.

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