Sprint Nextel Corp hopes to lure customers from rival service providers with a special $100 service credit for new subscribers who buy Palm Inc's Pre, essentially giving the device a 50 percent price cut a few months after it started selling the phone.

Sprint said on its website that the offer, which does not apply to existing customers, would be available for new Sprint customers who sign up before October 31 and commit to a 2-year service contract. The service credit would be added to customer invoices over a 3-month period, the company said.

Sprint's existing Pre price tag was $199, after rebates.

While some analysts said the offer could help boost sales, Piper Jaffray's Chris Larsen said that the discount likely means Sprint is having a tough time adding new customers.

We believe that the new promotion could indicate that net additions have been trending lower than the company expected for the third quarter, Larsen said in a research note.

Sprint, the only U.S. service provider currently allowed to offer the Pre, started to sell it in June.

Sprint's shares fell 5 cents to $3.76 on the New York Stock Exchange early Tuesday afternoon. Palm rose 39 cents to $15.00 on Nasdaq.

(Reporting by Sinead Carew; Editing by Richard Chang)