Really, all options obliterate morale.

Laying off people who you rank as "low end" on the acceptable performance scale, might mean you kill structurally important bricks that were not optimizing for being higher than "high enough" on that scale, and cannibalizes people working on anything valuable long-term but hard to justify to management short-term.

Laying off high performers means people don't want their head to be poking up, so they sabotage their own visibility to try being "good enough", while also killing people's motivations.

Laying off randomly kills people's morale directly worst of all, because that implies there's nothing they can do to change the outcome, and impotence is worse, arguably, than anything else for many people.

Any style of layoff is going to be bad for morale, but rumors floating around tank morale for as long as those rumors exist, and then moral takes another hit on the actual day. In that way it makes sense to just rip the Band-Aid off.

Of course, if you ask me, a more sensible plan to keep morale and lower costs would be getting rid of a few executives, but what do I know? I'm just a number on a spreadsheet.