Nokia (NYSE:NOK) shares got a welcome 6% bounce on the back of fourth-quarter results last Thursday. But the company's underlying earnings performance doesn't account for the price lift. More than anything else, it's the prospect of oversized cash returns that's keeping shareholders interested.

The holiday quarter was bumpy for the Finnish mobile-communications giant. Thanks to record demand for new phone models and solid sales of network equipment, Nokia's top line rose 3%, to $11.7 billion. Nokia regained momentum in handset sales to maintain its spot as the world's top vendor. According to market researchers IDC, Nokia now holds 34% of the market. That's the good news.

But aggressively chasing volume carries a price: lower profitability. Net income was down 13% to $1.33 billon in the fourth quarter from a year before. While Nokia estimates that its mobile-phone sales will grow by about 10% this coming year, net earnings will keep getting squeezed as competitive offerings from Motorola (NYSE:MOT), Sony Ericsson (NASDAQ:ERICY), and Samsung drive down average phone prices.

Fortunately for Nokia, it has plenty of cash socked away. To compensate for lower earnings, Nokia says it will ask shareholders to approve a buyback of as much as $6.5 billion worth of shares, or about 10% of the firm's market value. If Nokia sticks to paying its current $0.39 dividend, shareholders could end up receiving $8.5 billion this year. In all, the payout translates into more than 12% of Nokia's total value.

The buyback plan is praiseworthy, and other technology companies ought to take a page from the Nokia playbook in this regard. On the other hand, the size of the buyback offers a less-than-heartening indicator of the industry's, and Nokia's, earnings outlook. Nokia has the balance-sheet firepower to sustain its market value, but that's not a sure sign that the company can raise its value any higher from here.

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Fool contributor Ben McClure doesn't own shares of any companies mentioned in this article.