From Sparkpeople:
Paraphrased
Going too low on calories can hurt your ability to lose weight. Here's why.
Your body will protect itself from starvation during times of greatly-reduced food intake. So if you eat too little, your body thinks it's starving. To compensate, your metabolism will slow down considerably, making it very difficult (or impossible) for you to lose weight. In this state, your body will burn anything but your stored body fat. (This includes muscle such as heart tissue.)
Eating too little may cause as nutritional deficiencies. (I began losing hair) plus, when you increase your calories, your body may store these calories as fat, in preparation for another future "famine."
A slow weight loss of 1-2 pounds per week by combining a moderate calorie reduction with increased calorie expenditure through exercise is best.