Intel (INTC) reported third-quarter earnings and sales late Tuesday that topped Wall Street's  expectations despite a decline in PC sales.

The Santa Clara, Calif.-based chipmaker posted adjusted earnings of 60 cents a share, compared with a year-earlier 65 cents. The results topped average analyst estimates of 49 cents in a Thomson Reuters poll.

Revenue for the three months ended Sept. 29 was $13.5 billion, down from $14.23 billion in 2011, but beating the Street’s view of $13.23 billion.

The Silicon Valley giant, whose chips are in nearly 80% of all personal computers, recorded year-over-year sales improvements in both its data center and other Intel architecture groups, but said sales fell 8% to $8.6 billion in its PC client division.

“Our third-quarter results reflected a continuing tough economic environment," Intel CEO Paul Otellini said in a statement.

PC demand continues to be a problem area for all chipmakers amid a slowdown in demand as consumers favor mobile devices. Intel over the last few weeks was downgraded by both Sanford Bernstein and Citigroup (C) due to softening global PC demand. Intel last month cited a slowdown in previously fast-growing economies like China amid mute PC demand as the reason why it lowered its own third-quarter revenue forecast last month.

Analysts are also awaiting the release of Microsoft's (MSFT) Windows 8, which may help boost PC sales later this year. Although, some fear that adoption of the new software may be slower than expected.

Looking toward the fourth quarter, Intel anticipates $13.6 billion in sales, plus or minus $500 million. The consensus is calling for sales of $13.7 billion.

Shares of Intel slumped 1.8% to $21.95 after hours following the news.

Follow Jennifer Booton on Twitter at @Jbooton