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Apple's Brand Is a Hidden Asset

SAN FRANCISCO ( TheStreet) -- Countless analysts have called for Apple (AAPL - Get Report) to introduce a cheaper iPhone, a larger iPhone and more products to boost revenue. That may be short-sighted as Apple's brand could be worth more to the bottom line than a $399 iPhone.

UBS analyst Steven Milunovich, who rates shares "buy" with a $500 price target, said he believes Apple's marketing and brand mystique could be worth more than diluting its brand with lesser products. Although financially painful, Apple may be right in not giving Wall Street immediate gratification, Milunovich wrote in his note. "Ultimately, new category creation through innovation is required given the maturation of smartphones."

There's been a lot of talk about an Apple-branded smartwatch, an Apple television and other hardware that could be part of the new categories Milunovich is talking about. During Apple's most recent earnings call, CEO Tim Cook said Apple has some new products, software and services to come in the fall and in 2014.

"Our teams are hard at work on some amazing new hardware, software, and services that we can't wait to introduce this fall and throughout 2014. We continue to be very confident in our future product plans," Cook said during the call.

Apple shares were lower in early Tuesday trading, down 0.72% to $439.76.

Marketing is an important part of selling consumer electronics, one which Milunovich believes is "underappreciated." Apple was the dominant marketing machine in technology under former CEO Steve Jobs. The company has lost that edge, due partly because of Jobs' death, but competitors such as Samsung, Google (GOOG - Get Report) and others have stepped up their product portfolios as well.

Apple has been an aspirational brand for many years, perhaps as far back as the Apple II. The introduction of the iPod really ramped up the idea of the aspirational brand, and the iPhone took that and ramped it up beyond anyone's imagination. Apple has been successful where others haven't been, most notably Apple Stores. Apple generated $5.2 billion in revenue in its most recent quarter from Apple Retail Stores, up 19% year over year.

The idea that innovation is dead or slowing at Apple has been the pressing thought of 2013 from both the buy-side, as well as many on the sell-side. Earnings estimates have been missed, and the company has not announced a new product since October 2012, when it announced the iPad mini, a new iPad, and several Mac computers, including the sleek, new iMac.

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