Sprint Offers $100 Credit On Palm Pre To New Customers

Sprint Nextel Corp. (S), looking to get aggressive in reversing its subscriber losses, unveiled a $100 service credit to customers who switch to its service and buy the Palm Inc. (PALM) Pre.

The credit amounts to a $100 discount on the Pre, which has been positioned as the flagship device for the Overland Park, Kan., carrier. While the touchscreen device has been moderately successful, it hasn't done much to draw new subscribers.

The offer is eligible only for someone who "ports" their number in, or transfers an existing cellphone number from another carrier to Sprint. It is available online and through Sprint stores. Industry observers say it should boost interest.

"We believe this incremental price break will help stimulate sales for Sprint depending on how much they advertise it," said Walter Piecyk, an analyst at Pali Research.

The Pre didn't jump out of the gate, hurt by supply constraints that meant the devices were largely confined for sale at Sprint stores. The phones eventually became available to nationwide chains such as Best Buy Co. (BBY), and the company had hopes that their broader reach would mean new customers.

For Palm, there is a limited window for success for the Pre. Cellphones often get discounted after a few months on the market, particularly if they don't sell well.

Robert W. Baird analyst William Power said Research in Motion Ltd.'s (RIMM) Blackberry Tour was the most recommended smartphone at Sprint stores, with Pre a close second.

Looking ahead, the HTC Corp. (2498.TW) Hero, powered by Google Inc.'s (GOOG) Android software, will hit Sprint stores in October. The carrier is expected to launch several other high-profile smartphones in the coming months.

Palm will have to rely on a second device using its WebOS platform, widely expected to be unveiled in the coming weeks, as well as the Pre showing up at Verizon Wireless next year.

Sprint closed down 3% to $3.70. Palm closed up 2.5% to $14.98.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; [e-mail]