SolarCity Corp. (NASDAQ: SCTY) may be taken over by Tesla Motors Inc. (NASDAQ: TSLA). No matter how promising SolarCity’s prospects are, it lost $283 million last quarter on $123 million in revenue. The company had $361 million in cash on the balance sheet. Not much of a margin for a takeover target with a buyout price of $2.8 billion.

According to Reuters, Elon Musk, who is the largest shareholder of both companies, said:

Instead of making three trips to a house to put in a car charger and solar panels and battery pack, you can integrate that into a single visit. It’s an obvious thing to do.

It is open to question how many installation firms and homeowners want to take those three trips. Somehow Musk reasons that the Tesla name will help lift SolarCity sales. However, for the time being, it is still a tiny company.

SolarCity’s balance sheet is ugly. Its total liabilities are $6.2 billion. On the asset side of the ledger, it claims $4.8 billion in solar energy systems (leased or to be leased). The number is also open to question.

In its quarterly statement, management wrote:

Most significantly, subsequent to the end of the first quarter of 2016, we closed our first cash equity transaction totaling $227 million covering 201 MW Deployed under Energy Contracts. Composed of a portfolio that is 74% residential and 26% C&I and is geographically diversified across 18 states plus D.C. (38% East Coast, 34% California, 13% Arizona, 8% Nevada, and 7% other), the transaction underscores the inherent quality of our contracted and installed assets and the long-term visibility of the underlying cash flows

Those “East Coast” numbers must be more impressive than at first glance.

Guidance was pathetic:

Looking ahead, we are recalibrating our outlook for the year after taking into account the regulatory developments that impacted Q1 2016 MW Booked and the impact of an increase in pricing for our commercial business. While the regulatory clarity provided by California, Massachusetts, New Hampshire and New York put many of last quarter’s headwinds behind us, we do not expect to be able to make up for the decline in MW Booked in Q1 2016. In conjunction with the lower MW expected from higher pricing instituted in Q2 2016, we now expect to install 1.0 – 1.1 GW in 2016 as compared to 1.25 GW previously. For Q2 2016 we expect to install 185 MW, representing a decline of 2% year-over-year, largely due to the 14 MW project that was completed ahead of time in Q1 2016.

Also for Q2 2016, we expect GAAP Revenue from Periodic Billings of $105-108 million, Solar Energy Systems and Components Sale Revenue of $14-16 million, and Revenue from Operating Lease Prepayments and Upfront Incentives of $16-19 million. Operating Expenses are forecast to range between $240 million and $250 million (including $30-35 million in non-cash amortization of intangibles and stock compensation expense) and Non-GAAP Loss Per Share (before Income (Loss) Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests) between ($2.70) – ($2.80).

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Little revenue growth, huge losses and “regulatory developments.” The business is not much more than a utility dependent on government approvals.

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