There are essentially two kinds of layoffs: "We're getting rid of Division X and everyone in it" and "We need to reduce expenses and so we're laying off people." In this case, it sounds like a little bit of each.

There are entire companies dedicated to executing (pardon the pun) layoffs "correctly" and there are as many ways to do it as there are managers, but they essentially fall into three categories: cost-based (get rid of the most cost), skills-based (get rid of the people who don't have skill X that we totally need) and performance-based (get rid of the people who suck). Most of what you're talking about sounds cost-based, in which case there's two philosophies: get rid of the most senior people who charge the most (hello, age discrimination lawsuits) and get rid of a lot of junior people whose productivity is lower and expect the senior people to pick up the slack.

And yes, I have had the privilege of working in a Fortune 500 company and helping put together a layoff list - worst job of my life.